Question
Blue Sky Corporation is evaluating the proposed acquisition of a new production machine. The machine's base price is $260,000, and installation costs would amount to
Blue Sky Corporation is evaluating the proposed acquisition of a new production machine. The machine's base price is $260,000, and installation costs would amount to $28,000. An additional $14,000 in net working capital would be required at installation. The machine has a class life of 2 years. The machine would save the firm $250,000 per year in operating costs. The firm is planning to keep the machine in place for 2 years. At the end of the second year, the firm plans to sell the machine for $120,000. The firm has a required rate of return on investment projects of 12% and a marginal tax rate of 21%. What is the NPV of the project?
Group of answer choices
$130,250
$183,627
$158,466
$169,627
$122,300
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