Temple Corp. is considering a new project whose data are shown below. The 
equipment that would be used has a three-year tax life, would be depreciated by 
the straight-line method over its three-year life, and would have a zero salvage 
value. No new working capital would be required. Revenues and other operating 
costs are expected to be constant over the project’s three-year life. What is 
the project’s NPV?
Risk-adjusted WACC 
Net investment cost (depreciable 
basis) 
Straight-line deprec. rate 
Sales revenues, each year 

Operating costs (excl. deprec.), each year 
Tax rate 10.0% 
$65,000 

33.333% 
$65,500 
$25,000 
35.0% 
a. $15,740 
b. $16,569 

c. $17,441 
d. $18,359 
e. $19,325

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