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Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: Hartsfield Company is considering purchasing a set of machine tools at a cost of

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Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: Hartsfield Company is considering purchasing a set of machine tools at a cost of $80,000. The purchase is expected to generate revenues of $26,000. The purchase of the tools will also lead to higher operating costs of $6,000 per year in each of the next three years. Additional profits will be taxed at a rate of 40%. The asset falls into CCA Class 45 (rate = 20%) for tax purposes and the 50% rule applies. The project has a three-year life. The constant-dollar market (re-sale) value of the machine tools is expected to fall by 30% annually. The company will require a working capital of $10,000 to be maintained in purchasing power over the lifetime of the project, and can be recovered at the time of the project's completion. The general inflation rate is 8% per year (and affects everything that it normally affects). Assume inflation-free interest rate, i'=5%. Find the Net Present worth in constant dollars. a) Between -$9,300 and $9,700 Ob) Between $13,100 and -$13,500 O c) Between - $6,300 and - $6,700 O d) Between -$11,100 and -$11,500 e) None of the answers are correct Of) Between -$6,700 and -$7,100

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