Question
.Harriet Harvester (HH) plans to buy a haymaker. It costs $180,000 and is expected to last for five years. She presently hires 3 workers at
.Harriet Harvester (HH) plans to buy a haymaker. It costs $180,000 and is expected to last for five years. She presently hires 3 workers at $3,000 per month for each of the six harvesting months each year. The equipment would eliminate the need for all three workers, as it will fully automate the operation. HH uses straight-line depreciation and projects no salvage value. Her tax rate is 20% and opportunity cost of funds is 8.0%. Which is true (if your NPV is close to one provided chose that option)?
A. NPV is $21,247
B. NPV is $21,247
C. NPV is -$7,502
D. NPV is $7,502
E. None of the above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started