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Green Monstah Landscaping Corp.

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Green Monstah Landscaping Corp. is considering some new equipment whose data are shown below. THe equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the equipment would be sold. Also, additional net operating working capital would be required, but it would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?;WACC: 5.5%;Net investment in fixed assets (depreciable basis): $9,000;Required net operating working capital: $300;Straight-line depreciation for 3 years;Annual sales revenues: $10,000;Annual operating costs (excluding depreciation): $1,000;Expected sale price: $2,000;Tax rate: 35%

 

Paper#21688 | Written in 18-Jul-2015

Price : $27
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