What is the projects npv and irr

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Reference no: EM13200220

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. New working capital of $6,000 is required for inventory. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV and IRR?

WACC

10%

Net investment cost (depreciable basis)

$65,000

Straight-line depreciation

3 years

Sales revenues, each year

$65,500

Operating costs (excl. deprec.) each year

$25,000

Working Capital for inventory

$6,000

Tax Rate

35%

a. NPV = $17,832 ; IRR = 23.89%

Reference no: EM13200220

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