Question
MACRS table needed for this problem. Meals on Wings Inc. supplies prepared meals for corporate aircraft (as opposed to public commercial airlines), and it needs
MACRS table needed for this problem. Meals on Wings Inc. supplies prepared meals for corporate aircraft (as opposed to public commercial airlines), and it needs to purchase new broilers. If the broilers are purchased, they will repleace old broilers purchased 10 years ago for $105,000 and which are being depreciated on a straight-line basis to a zero salvage value (15 -year depreciable life). The old broilers can be sold for $60,000. The new broilers will cost $200,000 installled and will be depreciated using MACRS over their 5-year class life; they will be sold ar their book value at the end of the 5th year. The firm expects to increase its revenue by $18,000 per year if the new broilers are purchased, but cash expenses will also increase by $2,500 per year. If the firm's cost of capital is 10% and its tax rate is 34%, what is the NPV of the broilers? | |||||||||||
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