This paper circulates around the core theme of The expected life of the project and the equipment is 3 years and the equipment has zero salvage value. The company uses straight-line depreciation on all equipment and the depreciation expense on the equipment would be $150,000 per year. Assume cash flow together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Brodigan Corporation has provided the following information concerning a capital budgeting project:
Investment required in equipment $450,000
Net annual operating cash inflow $220,000
Tax rate 30%
After-tax discount rate 12%
The expected life of the project and the equipment is 3 years and the
equipment has zero salvage value. The company uses straight-line
depreciation on all equipment and the depreciation expense on the
equipment would be $150,000 per year. Assume cash flows occur at the end
of the year except for the initial investments. The company takes
income taxes into account in its capital budgeting. The net annual
operating cash inflow is the difference between the incremental sales
revenue and incremental cash operating expenses.
Required:
What is the net present value of the project?
