Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC is thinking about buying a kiln that costs $27,000. ABC will use the kiln for five years, and expects to be able to sell

ABC is thinking about buying a kiln that costs $27,000. ABC will use the kiln for five years, and expects to be able to sell it as scrap at the end of the five year period for $2,000. The kiln won't add any revenues, but it is more efficient than the existing kiln, so it is expected that it would save the firm $15,651 the first year, $9,484 the second year, $8,578 the third year, $4,112 the fourth year, and $3,043 the fifth and final year. The kiln would be depreciated using standard 3-year MACRS percentages (33%, 45%, 15%, and 7%). ABC's cost of capital is 12 percent. Given that information, what is the NPV of this potential project?

Step by Step Solution

3.37 Rating (156 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the Net Present Value NPV of the potential project we need to consider the initial cost ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Mathematics for Business Economics Life Sciences and Social Sciences

Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen

12th edition

321614003, 978-0321614001

More Books

Students also viewed these Finance questions

Question

Graph each inequality or compound inequality. 5x - y > 6

Answered: 1 week ago

Question

What are some of the features of the Unified Process (UP)?

Answered: 1 week ago

Question

In problem, find f (x). f(x) = ln x10 + 2 ln x

Answered: 1 week ago