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A private gym is looking at a new set of sports equipment with an installed cost of $505,000. This cost will be depreciated straight-line to
A private gym is looking at a new set of sports equipment with an installed cost of $505,000. This cost will be depreciated straight-line to zero over the projects five-year life, at the end of which the sports equipment can be scrapped for $77,000. The sports equipment will save the gym $168,000 per year in pretax operating costs, and the equipment requires an initial investment in net working capital of $31,000. If the tax rate is 25 percent and the discount rate is 13 percent, what is the NPV of this project?
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