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What is the npv of the project

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Reference no: EM131945346

Question - Stanley Company has obtained the following information about a proposed project:

Annual cash operating savings (excluding depreciation) for 5 years (end of year) $50,000

Depreciation expense per year for tax purposes $33,000

Estimated salvage value in 5 years $10,000

Cost of equipment $175,000

Required rate of return 11%

Estimated useful life (in years) 5

Depreciation method for tax purposes Straight-line Present value of ordinary annuity of one.

Required:

A) What is the NPV of the project?

B) Should the project be undertaken?

Reference no: EM131945346

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