The investment project will utilize piece of land

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Reference no: EM131899321

He is considering a new investment whose data are shown below.

a) The investment project will utilize a piece of land with the market of value of $15,000.

b) He advised the firm to hire a marketing research firm and conduct feasibility research on the project, which has already cost the firm $10,000.

c) The project will require the purchase of machinery and equipment for the amount of $75,000.

d) The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value.

e) The project also would require additional net operating working capital for the amount of $15,000 that would be recovered at the end of the project's life.

f) The company has a WACC of 10% and a tax rate of 35%

g) The project would increase the company's annual sales by $75,000 each year for three years. (t=1 to t=3)

h) Annual cost for the project will be $25,000 per year.

i) The firm pays $12,000 interest expenses every year for their bank loans.

What is the project's NPV?

Reference no: EM131899321

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