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Manapement of Braden Boats, inc, is considering an expansion in the firm's product line that requires the purchase of an adiditional $173,000 in equipment with
Manapement of Braden Boats, inc, is considering an expansion in the firm's product line that requires the purchase of an adiditional $173,000 in equipment with instaliation costs of $20,000 and removal expenses of $4,000 (Note: the removal expenses are considered terminal cash thows and not associated with the installation of the new equipment). The equipment and instaliation costs wil be deprechated over five years using straightline depreciation. The expansion is expected to increase earnings before depreciation and taxes as follows: The firm's income tax rate is 30 percent and the weighted-average cost of capital is 18 percent Based on the net present vaiue method of capital budgeting, shoufd management undertake this project? Use Appendix B to answs the question. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. NPVTI 5 The firm make the investment
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