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Gamma Electronics is considering the purchase of testing equipment that will cost $436,000 to replace old equipment. Assume the new equipment will generate before-tax savings
Gamma Electronics is considering the purchase of testing equipment that will cost $436,000 to replace old equipment. Assume the new equipment will generate before-tax savings of $380,000 per year over the four years. The new equipment will result in additonal depreciation of $51,000 per year. If the cost of capital is 17% and the tax rate is 30%, what is the NPV of the project.
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