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Overnight Laundry is considering the purchase of a new pressing machine that would cost $123,840 and would produce incremental operating cash flows of $32,250 annually
Overnight Laundry is considering the purchase of a new pressing machine that would cost $123,840 and would produce incremental operating cash flows of $32,250 annually for 10 years. The machine has a terminal value of $7,740 and is depreciated for income tax purposes using straight-line depreciation over a 10-year life (ignore the half-year convention). Overnight Laundry's marginal tax rate is 33.3%. The company uses a discount rate of 18%.
What is the Net present value of the project ?
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