Mccrohan Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with a 4 year useful life and zero salvage value.Data concerning that project appear below:
An investment of $30,000 in working capital would be required immediately and would be released for use elsewhere at the end of the project.The company uses straight-line depreciation on all equipment.Assume cash flows occur at the end of the year except for the initial investments.The company takes income taxes into account in its capital budgeting.The company's tax rate is 35% and the after-tax discount rate is 10%.
Required:
Determine the net present value of the project.Show your work!

Question

Mccrohan Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with a 4 year useful life and zero salvage value.Data concerning that project appear below:
  An investment of $30,000 in working capital would be required immediately and would be released for use elsewhere at the end of the project.The company uses straight-line depreciation on all equipment.Assume cash flows occur at the end of the year except for the initial investments.The company takes income taxes into account in its capital budgeting.The company's tax rate is 35% and the after-tax discount rate is 10%.
Required:
Determine the net present value of the project.Show your work!

Quizplus · Accepted Answer

The Answer of Mccrohan Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with a 4 year useful life and zero salvage value.Data concerning that project appear below:
  An investment of $30,000 in working capital would be required immediately and would be released for use elsewhere at the end of the project.The company uses straight-line depreciation on all equipment.Assume cash flows occur at the end of the year except for the initial investments.The company takes income taxes into account in its capital budgeting.The company's tax rate is 35% and the after-tax discount rate is 10%.
Required:
Determine the net present value of the project.Show your work!

Mccrohan Corporation Is Considering a Capital Budgeting Project That Would