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Johnson Entertainment is considering the purchase of a new disco ball. Johnson entertainment can purchase a new high-tech disco ball for $5000 an sell its
Johnson Entertainment is considering the purchase of a new disco ball. Johnson entertainment can purchase a new high-tech disco ball for $5000 an sell its old disco ball for $2000. The new disco ball will last for 5 years and save ME $1000 in expenses. The opportunity cost of capital is 10%. The firm's tax rate is 10 percent. The new disco ball will depreciate straight-line to zero over its 5-years life. The old disco ball is fully depreciate. What is the NPV of the project.
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