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A company is looking at a new manufacturing system with an installed cost of $315,000. This cost will be depreciated straight-line to zero over the
A company is looking at a new manufacturing system with an installed cost of $315,000. This cost will be depreciated straight-line to zero over the project's five- year life, at the end of which the system can be scrapped for $25,000. This system will save the firm $85,000 per year in pre-tax operating costs and the system requires an initial investment in net working capital of $25,000 with all net working capital levels restored to their original levels when the project ends. If the tax rate is 34% and the discount rate is 10%, what is the NPV of this project
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