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Description of a Project's Net Present Value

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A project has an initial requirement of $310,000 for fixed assets and $62,000 for net working capital. The fixed assets will be depreciated to a zero book value over the 3-year life of the project and have an estimated salvage value of $155,000. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $345,000 and the discount rate is 18 percent. What is the project's net present value if the tax rate is 34 percent?

1. 403618.02
2. 414141.41
3. 446047.36
4. 478122.21
5. 510197.06.

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Solution Summary

This solution is provided in an attached Excel spreadsheet and explains the computation of a project's net present value. By clicking directly onto the cells of the Excel file, the user can see what functions were employed to derive the computed values.

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