What is the projects net present value if the tax rate is 30

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Question

Aussie Home Entertainment Pty Ltd is setting up a new franchised store in an outer suburb of Sydney. This project has an initial requirement of $261 000 for fixed assets and $27 000 for net working capital.

The fixed assets will be depreciated to a zero book value over the four-year life of the project and have an estimated salvage value of $78 000. All of the net working capital will be recouped at the end of the project.

The annual operating cash flow is $96 200 and the discount rate is 13%. What is the project's net present value if the tax rate is 30%?

Reference no: EM132321655

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