Century Roofing is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100
equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zere
revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)
Project cost of capital (r)
Opportunity cost
Net equipment cost (depreciable basis)
Straight-line deprec. rate for equipment
Sales revenues, each year
Operating costs (excl. deprec.), each year
Tax rate
a. $26,796
b. $28,207
c. $31,254
O d. $29,691
Oe. $32,817
O Icon Key
10.0%
$100,000
$65,000
33.333%
$123,000
$25,000
25%
