Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $695,000 that...

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Lakeside Winery is considering expanding its winemakingoperations. The expansion will require new equipment costing$695,000 that would be depreciated on a straight-line basis to zeroover the 6-year life of the project. The equipment will have amarket value of $191,000 at the end of the project. The projectrequires $61,000 initially for net working capital, which will berecovered at the end of the project. The operating cash flow willbe $164,600 a year. What is the net present value of this projectif the relevant discount rate is 13 percent and the tax rate is 40percent?

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Lakeside Winery is considering expanding its winemakingoperations. The expansion will require new equipment costing$695,000 that would be depreciated on a straight-line basis to zeroover the 6-year life of the project. The equipment will have amarket value of $191,000 at the end of the project. The projectrequires $61,000 initially for net working capital, which will berecovered at the end of the project. The operating cash flow willbe $164,600 a year. What is the net present value of this projectif the relevant discount rate is 13 percent and the tax rate is 40percent?