Question 5 10 Marks 25 Minutes 2 5 0 Anterior Inc. has been approached by a vendor regarding an upgrade to a key piece of equipment. The new equipment would provide operating efficiencies for both direct labour and direct materials. The new equipment would result in a total annual savings of $600,000 per year. The new piece of equipment will cost the company $2,400,000 and will be purchased at the beginning of 2021. The old equipment currently has a book value of $100,000 but Anterior estimates the fair value of the equipment to be $140,000. The new equipment has a salvage value of $105,000 after its expected useful life of 7 years. Anterior requires a 15% after-tax return on its capital investments. The new equipment purchase will require an increase in working capital of $180,000 when the equipment is purchased. This amount will be recovered by the company at the end of the 8 years. 1 REQUIRED 2 Calculate the Net Present Value of this project. Should the project be accepted by the company? Show all calculations. 3 4 Your Response