Question
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $7,200 and sell its old washer
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $7,200 and sell its old washer for $2,500. The new washer will last for 6 years and save $1,700 a year in expenses. The opportunity cost of capital is 15%, and the firms 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. Note: Negative amounts should be indicated by a minus sign.
B.)What is project NPV? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
C.) What is NPV if the firm investment is entitled to immediate 100% bonus depreciation? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $7,200 and sell its old washer for $2,500. The new washer will last for 6 years and save $1,700 a year in expenses. The opportunity cost of capital is 15%, and the firms tax rate is 21%.
A.)Annual operating cash flow in year 0 | ? |
A.) Annual operating cash flow in years 1 to 6 | ? |
B.) NPV | ? |
C.) NPV | ? |
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