Question
Bottom up diaper service is considering the purchase of a new industrial washer. It can purchase the washer for $4,500 and sell its old washer
Bottom up diaper service is considering the purchase of a new industrial washer. It can purchase the washer for $4,500 and sell its old washer for $900. The new washer will last for 6 years and save $1,100 a year in expenses. The opportunity cost of capital is 12%, and the firm's tax rate is 21%.
A. if the firm uses straight-line depreciation over a 6 year life, what are the cash flows of the project in years 0 to 6? The new washer will have zero salvage value after 6 years, and the old washer is fully depreciated. (negative amounts should be indicated by a minus sign.)
B. What is project NVP? (do not round intermediate calculations. round your answer to 2 decimal places.)
C. what is NVP if the firm investment is entitled to immediate 100% bonus depreciation? (do not round intermediate calculations. round your answer to 2 decimal places.)
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