Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 labor costs but will require an increase in working capital, mainly paper supplies, of $7,000. The firm's marginal 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?(Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

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

Personal Finance

Authors: Jeff Madura, Hardeep Singh Gill

3rd Canadian Edition

978-0133035575, 133035573, 978-0133970524, 133970523, 978-0134040042

More Books

Students also viewed these Finance questions

Question

CS 3 6 0 3 - 2 Assignment plain text

Answered: 1 week ago