### Explain project evaluation through npv

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Explain Project evaluation through NPV

Swannee Resorts is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight line method over the project's 3 year life, and would have zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? If you are working this problem by hand rather than by computer, ignore small rounding differences between your answer and the choices given. (Hint: Cash flows are constant in years 1-3.)

WACC 10%

Net investment cost (depreciable basis) \$65,000

Sales revenues \$70,000

Operating costs excl. dip's \$25,000

Tax Rate 35%
a) \$22,156.24
b) \$23,791.14
c) \$24,354.87
d) \$25,189.71
e) \$26,599.05

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