Question
Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,300 per year
Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,300 per year and will cut annual operating costs by $14,400. The system will cost $49,500 to purchase and install. This system is expected to have a 7-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.9 percent. What is the NPV of purchasing the pressure cooker?
$39,096 $7,918 $1,794 $39,401 $20,016
Power Manufacturing has equipment that it purchased 6 years ago for $2,300,000. The equipment was used for a project that was intended to last for 8 years. However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $350,000 today. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment?
$469,000 $388,250 $397,250 $273,500 $350,000
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