The equipment would be sold for an after-tax cash flow

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Reference no: EM131067947

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 340,000 dollars today. The equipment would be depreciated straight-line to 20,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 29,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 210,000 dollars and relevant costs are expected to be 104,000 dollars. The tax rate is 50 percent and the cost of capital for the project is 13.99 percent. What is the NPV of the project?

Reference no: EM131067947

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