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# NPV

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Lugar Industries is considering an investment in a proposed project which requires an initial expenditure of \$100,000 at t = 0. This expenditure can be depreciated at the following annual rates:

Year Depreciation Rate
1 20%
2 32
3 19
4 12
5 11
6 6

The project has an economic life of six years. The project's revenues are forecasted to be \$90,000 a year. The project's operating costs (not including depreciation) are forecasted to be \$50,000 a year. After six years, the project's estimated salvage value is \$10,000. The company's WACC is 10 percent, and its corporate tax rate is 40 percent. What is the project's net present value (NPV)?

a. \$31,684
b. \$33,843
c. \$34,667
d. \$38,840
e. \$45,453

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https://brainmass.com/economics/personal-finance-savings/project-net-present-value-npv-calculation-242948

#### Solution Summary

The solution explains how to calculate the NPV of a project in detailed steps found in an Excel file.

\$2.19