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1. XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $48,100.00. It would be depreciated straight-line
1. XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for
$48,100.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-
tax cash flow of $14,000.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2
years. With the system, costs are expected to be $75,100.00 in 1 year and $65,400.00 in 2 years. If the tax rate is
48.70% and the cost of capital is 8.80%, what is the net present value of the new interception system project?
O $15608.50 (plus or minus $50)
O $14768.20 (plus or minus $50)
O $12532.09 (plus or minus $50)
O $11121 40 (plus or minus $50)
O None of the above is within $50 of the correct answer
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