Illustrate what is the net present value of the asset

Reference no: EM13121609

Q. A company is considering purchasing as asset for $50,000 that would have a useful life of 5 years and a salvage value of $6,000. For tax purposes the entire original cost of the asset would be depreciated over 5 years using the straight-line method and the salvage value would be ignored. The asset would generate net cash inflows of $26,000 throughout the useful life. The project would require additional working capital of $8,000 which would be released at the end of the project. The company's tax rate is 30% and its discount rate is 15%. Illustrate what is the net present value of the asset?

Reference no: EM13121609

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