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The following data has been assembled for a proposed rope splicing machine (RSM): RSM Cost: $26,000 Life: 5 years Revenue (p.a.) $12,000 Operating Expenses (p.a.)
The following data has been assembled for a proposed rope splicing machine (RSM):
|
| RSM |
| Cost: | $26,000 |
| Life: | 5 years |
| Revenue (p.a.) | $12,000 |
| Operating Expenses (p.a.) | $4,000 |
| Depreciation (p.a.) | $5,000 |
| Salvage Value: | $500 |
If a firm requires a 10% p.a. return (after tax at the effective tax rate) on its investments and has an effective tax rate of 20%, calculate the NPV of the RSM.
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