Question
Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life.
Risk-adjusted WACC 10.0%
Net investment cost (depreciable basis) $65,000
Straight-line depreciation rate 33.3333%
Sales revenues, each year $65,500
Operating costs (excluding depreciation.), each year $25,000
Tax rate 35.0%
What are the net cash flows in Years 0, 1, 2, and 3?
What is the project's NPV and IRR?
please with IRR