Tanque Verde Tortilla Company is considering a 3-year projec…
Tanque Verde Tortilla Company is considering a 3-year project. The equipment costs $60,000 and, under current tax law, is eligible for 100% bonus depreciation, so it is fully depreciated at t = 0. Sales of $50,000 per year and operating costs of $24,000 per year are expected to be constant over the project’s life. The tax rate is 25% and the WACC is 10%. The equipment will have zero salvage value and no change in net operating working capital is required. What is the project’s NPV?