A company is planning to buy an upgraded packaging machine that would cost $80,000. It would add $35,000 to pre-tax revenues and $12,000 to pre-tax operating costs (before taking account of depreciation) per year.

The packaging machine will be depreciated on a straight-line basis, and assumes no salvage value, over 5 years (ignore the MACRS depreciation methodology for this problem.)

Assuming a 23% marginal tax rate, and a 8% WACC, calculate the NPV of this investment.

Do you recommend this project?