Umbrella Corp., has a WACC of 10.2% and a tax rate of 26%. Project Alice requires an upfron cost of $150,000 for equipment at time (0). This equipment can be depreciated (straight-line... equal...


Umbrella Corp., has a WACC of 10.2% and a tax rate of 26%.  Project Alice requires an upfron cost of $150,000 for equipment at time (0).  This equipment can be depreciated (straight-line... equal amounts) over the next three years.  At the end of those three years, the equipment will have zero salvage value.  Using this equipment will result in a $30,000 increase in working capital which can be recovered in year three after the machine goes offline.  There project should generate $140,000 in gross revenue and incur operating cost of $60,000 every year for the next three years (not including depreciation expense).  What is the net present value of Project Alice to the nearest dollar?



Jun 09, 2022
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