Homework Answers
SLD depreciation per year = (P-S)/N = 100000 / 4 = 25000
Taxable income = Revenue - annual cost - Depreciation = 30000 - 5000 - 25000 = 0
Tax = 0
ATCF = 30000 - 5000 = 25000
NPV = -100000 + 25000 * (P/A, 10%,4)
= -100000 + 25000 * 3.169865
= -20753.36
As the NPV is negative, this project should not be selected
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