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Hurzdan, Inc., is considering the purchase of a $371,000 computer with an economic life of four years. The computer will be fully depreciated over four
Hurzdan, Inc., is considering the purchase of a $371,000 computer with an economic life of four years. The computer will be fully depreciated over four years using the straight-line method. The market value of the computer will be $71,000 in four years. The computer will replace four office employees whose combined annual salaries are $116,000. The machine will also immediately lower the firms required net working capital by $91,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 21 percent. The appropriate discount rate is 10 percent. |
Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Cori's Meats is looking at a new sausage system with an installed cost of $485,000. This cost will be depreciated straight-line to zero over the projects five-year life, at the end of which the sausage system can be scrapped for $71,000. The sausage system will save the firm $165,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $30,000. If the tax rate is 21 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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