Question
Sun Inc. is considering purchasing a new piece of steel-bending equipment for its Save-The-Planet reel mower. The equipment will cost $240,000 and last six years.
Sun Inc. is considering purchasing a new piece of steel-bending equipment for its Save-The-Planet reel mower. The equipment will cost $240,000 and last six years. Due to its superior productivity, the equipment is expected to save Push Mower Company $80,000 each year in utility and defect expenses. The equipment will be sold at the end of this project for $24,000. The company borrows at 3%, but it has not yet decided if it will pay cash or finance the purchase. The company will initially need supplies of $5,000 to support the equipment, with that amount increasing $500 each year. The companys Tax Rate is 21%, while the required return for projects of this sort is 12%. Using the process from lecture, what is the NPV of the project?
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