Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kinky Copies may buy a high - volume copier. The machine costs $ 8 0 , 0 0 0 and this cost can be fully

Kinky Copies may buy a high-volume copier. The machine costs $80,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually can be sold in 5 years for $23,000. The machine will save $21,000 a year in (after-tax) labor costs but will require an increase in working capital, mainly paper supplies, of $7,000. The firms tax rate is 21%, and the discount rate is 10%.(Assume the net working capital will be recovered at the end of Year 5.)
What is the NPV of this project?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economics Of Money Banking And Financial Markets

Authors: Frederic Mishkin

13th Global Edition

1292409487, 978-1292409481

More Books

Students also viewed these Finance questions

Question

What is an overriding method?

Answered: 1 week ago