Thomson Media is considering some new equipment whose data are shown below. The equipment has a...

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Thomson Media is considering some new equipment whose data areshown below. The equipment has a 3-year tax life and would be fullydepreciated by the straight-line method over 3 years, but it wouldhave a positive pre-tax salvage value at the end of Year 3, whenthe project would be closed down. Also, additional net operatingworking capital would be required, but it would be recovered at theend of the project's life. Revenues and other operating costs areexpected to be constant over the project's 3-year life. What is theproject's NPV? Do not round the intermediate calculations and roundthe final answer to the nearest whole number.
WACC 10.0%
Net investment in fixed assets (depreciable basis) $70,000
Required net operating working capital $10,000
Straight-line depreciation rate 33.333%
Annual sales revenues $57,000
Annual operating costs (excl. depreciation) $30,000
Expected pre-tax salvage value $5,000
Tax rate 35.0%
a. $–6,092
b. $-6,213
c. $-7,005
d. $-7,371
e. $-6,518

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Thomson Media is considering some new equipment whose data areshown below. The equipment has a 3-year tax life and would be fullydepreciated by the straight-line method over 3 years, but it wouldhave a positive pre-tax salvage value at the end of Year 3, whenthe project would be closed down. Also, additional net operatingworking capital would be required, but it would be recovered at theend of the project's life. Revenues and other operating costs areexpected to be constant over the project's 3-year life. What is theproject's NPV? Do not round the intermediate calculations and roundthe final answer to the nearest whole number.WACC10.0%Net investment in fixed assets (depreciable basis)$70,000Required net operating working capital$10,000Straight-line depreciation rate33.333%Annual sales revenues$57,000Annual operating costs (excl. depreciation)$30,000Expected pre-tax salvage value$5,000Tax rate35.0%a. $–6,092b. $-6,213c. $-7,005d. $-7,371e. $-6,518

WACC	10.0%
Net investment in fixed assets (depreciable basis)	$70,000
Required net operating working capital	$10,000
Straight-line depreciation rate	33.333%
Annual sales revenues	$57,000
Annual operating costs (excl. depreciation)	$30,000
Expected pre-tax salvage value	$5,000
Tax rate	35.0%