A company is considering a new venture. This venture will require the purchase of $321,000 of equipment (which belongs in a 20% CCA class), $45,000 in inventory, and will increase accounts payable by $73,001. Expected sales are $625,000 with costs of $480,001. The project will last for five years, be taxed at 35% and have a required rate of return of 14%. The equipment will have no salvage value at the end of the project. What is the net present value of this project?

Question

Quizplus · Accepted Answer

The Answer of A company is considering a new venture. This venture will require the purchase of $321,000 of equipment (which belongs in a 20% CCA class), $45,000 in inventory, and will increase accounts payable by $73,001. Expected sales are $625,000 with costs of $480,001. The project will last for five years, be taxed at 35% and have a required rate of return of 14%. The equipment will have no salvage value at the end of the project. What is the net present value of this project?

A Company Is Considering a New Venture