Herrolds resorts is thinking of new project whose data are given below. Equipment which would be used has 3 year tax life would be reduced by straight line method over project's 3 year life and would have zero salvage value. No new working capital would be needed. Revenues and other operating costs are expected to be constant over project's 3 year life. Determine project's NPV?
WACC 10%
Net investment cost (depreciable basis) $65,000
Straight line depr'n rate 33.33%
Sales revenues $70,000
Operating costs excl. depr'n $25,000
Tax rate 35%