Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The manager of company A is thinking about adding an air conditioner to the office. The AC will cost $1310 to buy and install. The

The manager of company A is thinking about adding an air conditioner to the office. The AC will cost $1310 to buy and install. The manager plans to use the AC for 5 years and each year's depreciation rate is 17% of the purchase price. The manager expects to sell the AC in 5 years for $370.The tax rate is 15% and the company's WACC is 6%. If the manager considers this purchase of AC as an investment, what is the NPV (keep two decimal places and assume that the AC will not affect the operations of the company)?

Step by Step Solution

3.52 Rating (155 Votes )

There are 3 Steps involved in it

Step: 1

PV 1310 Year 1 Depreciation 1310 17 22270 Year 1 Ta... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Accounting

Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson

12th edition

978-1133603054, 113362698X, 9781285607047, 113360305X, 978-1133626985

More Books

Students also viewed these Finance questions

Question

Q 0 6 : Write a C program to print the following pattern:

Answered: 1 week ago