Intro

The local franchise of Jiffy Lube is thinking of buying a new lift for $50,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business. The machine is to be linearly depreciated to zero and will have no resale value after 3 years.

The appropriate cost of capital for this project is 15%. The company has a tax rate of 21%.

	Year 1	Year 2	Year 3
Cost savings	70,000	77,000	92,400
Depreciation	16,667	16,667	16,667
EBIT	53,333	60,333	75,733
Taxes (21%)
NOPAT
Depreciation
PCF

Attempt 1/1

Part 1

What is the project cash flow in year 1?

Save

Attempt 1/1

Part 2

What is the project cash flow in year 2?

Save

Attempt 1/1

Part 3

What is the project cash flow in year 3?

Save

Attempt 1/1

Part 4

What is the NPV of this project?