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Foley Systems is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3.) WACC 10.0% Net investment in fixed assets (basis) $75,000 Required new working capital $15,000 Straight-line depr. rate 33.333% Sales revenues, each year $81,000 Operating costs (excl. depr.), each year $25,000 Tax rate 35.0%
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Dear Student, Please find the solution attached. Regards  

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