A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets...
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A 10-yr project has an initial cost of $400,000 for fixed assets. The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method. Each year, annual revenue is $60,000 and cost is $10,000. After 10 years, you will terminate the project. You expect to sell the the fixed assets for $250,000. The project is financed by 40% equity and 60% debt. The required rate of return on equity is 7% and the borrowing cost is 3%. Assume the tax rate is 25%. What is the project's NPV?
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