Question
Syntec Utilities needs to purchase a new piece of equipment in order to meet EPA requirements for carbon emissions. The company has two options for
Syntec Utilities needs to purchase a new piece of equipment in order to meet EPA requirements for carbon emissions. The company has two options for purchasing the equipment: Also assume Option B will get a tax rebate of $20,000 in year 4 and $15,000 in year 8. Syntec Utilities has a beta of .8, the risk free-rate is 3% and the market risk premium is 8%. A. Calculate the NPV of each option (10 points) Which strategic decision should Syntec Utilities take? Why?
| Initial | Main. Costs | Expected | Salvage | |
| Option | Investment | (per year) | Life (yrs) | Value |
| A | 18,000 | 2,000 | 6 | 4,100 |
| B | 28,000 | 1,900 | 13 | 1,000 |
this was all the information i was given in the problem . i assume the casflows are the main. costs per year
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started