The sum of net income and annual depreciation

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Was Corp. is considering starting a new business involving short-term loans of magic amulets. This new business involves purchases of $14 million of new equipment. This new business is anticipated to generate net income of $1.43 million per year for 15 years. The company uses straight-line depreciation to zero salvage value for its $14 million new equipment. Assuming a 30 percent tax rate and a 10 percent discount rate, what is the project’s Net Present Value (NPV), which is the present value of cash inflows minus the present value of cash outflows? Cash inflows are the sum of net income and annual depreciation. Cash outflows is the investment costs.

Reference no: EM131324725

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