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A new electronic process monitor costs $7,000,000. This cost could be depreciated at 30% per year. The monitor could be sold for $1,428,595 at the
A new electronic process monitor costs $7,000,000. This cost could be depreciated at 30% per year. The monitor could be sold for $1,428,595 at the end of five years. The new monitor would save the firm $2,400,000 before taxes in annual operating costs for the five years. There would be no impact on net working capital. The firms weighted average cost of capital is 15% and the corporate tax rate is 40%
What would be the NPV of purchasing this system?
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