This project will require an investment of $10,000 in new equipment. Under new tax law, the equipment is eligible for 100% bonus depreciation at t = 0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. Garida pays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%.
What is the projects NPV under new tax law?
