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A firm is considering replacing an old piece of equipment with a newer version that costs $6,280,000 and has a CCA rate of 35% per
A firm is considering replacing an old piece of equipment with a newer version that costs $6,280,000 and has a CCA rate of 35% per year. The old equipment could be sold today for $648,000. The new equipment could be sold for $107,308 at the end of ten years. There are no capital gains or losses to worry about. The new equipment would save the firm $1,250,000 before taxes in annual operating costs for each of the ten years. There are no net working capital changes required. The firm's WACC is 13% and it pays a ATA corporate tax rate of 37%. vnat would be the NPV or replacing the equipment? A) $125,668 B) $342,437 C) $96,314 X. D) $311,245 E) $539,891
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