Involve buying new piece of equipment

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Reference no: EM132031817

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 430,000 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 26,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 302,000 dollars and relevant costs are expected to be 130,000 dollars. The tax rate is 50 percent and the cost of capital for the project is 12.64 percent. What is the NPV of the project?

Reference no: EM132031817

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Involve buying new piece of equipment : Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 430,000 dollars today.

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