Question:
Foley systems is considering a new investment whose data are shown below.
The equipment would be depreciated on a straight-line basis over the project''S 3 years life, would have a zero salvage value and would require no additional net operating working capital.
Revenues and operating costs are expected to be constant over the project''S life.
Tax rate is 35%. What is the Npv,IRR,and probability index?
Cost of capital. 10%
Net investment. 75,000
Revenue. 75,000
Other Opportunity Cost 25,000
Depreciation. 33.33%
Tax rate. 35%