Litchfield design is evaluating a 3-year project that would


Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 190,000 dollars today. The equipment would be depreciated straight-line to 30,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 42,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 160,000 dollars and relevant costs are expected to be 43,000 dollars. The tax rate is 50 percent and the cost of capital for the project is 10.55 percent. What is the NPV of the project?

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Financial Management: Litchfield design is evaluating a 3-year project that would
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