Problem:
Down Under Boomerang , Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of ZAR 2.7 million. The fixed asset will be depreciated straight-line to zero over its three year tax life, after which it will be worthless. The project is estimated to generate ZAR 2,400,000 in annual sales, with costs of ZAR 960,000. The tax rate is 35 percent and the required return is 15 percent. What is the project's NPV?