You have been hired to assist labriola inc analyze the


You have been hired to assist Labriola, inc., analyze the following capital budget proposal. The five year project, if accepted, would require an initial investment in new equipment of $100,000. The equipment has a 5 year useful life and the firm wishes to maximize the depreciation tax shield. The equipment has no salvage value and will be sold at the end of the project for $6,000. The project is expected to result in $55,000 additional annual revenues, $15,000 additional annual expense, and $8,000 additional investment in working capital. Labriola has estimated the cost of capital at 11% but they are not extremely confident in that number. The company has a 40% tax rate (tax reform has not yet passed the congress). Do you accept the project? You must support your answer. Must be done in excel.

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Financial Management: You have been hired to assist labriola inc analyze the
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