Answered step by step
Verified Expert Solution
Question
1 Approved Answer
7. XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $50,000.00. It would be depreciated straight-line
7. XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $50,000.00. 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 $75,300.00 in 1 year and $68,600.00
in 2 years. If the tax rate is 46.90% and the cost of capital is 8.70%, what is the net present value of the new interception system project?
O $12412.55 (plus or minus $50)
O $8735.66 (plus or minus $50)
O S13163.88 (plus or minus $50)
O $10028.45 (plus or minus $50)
O None of the above is within $50 of the correct answer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started