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the net present value is not -$131,272.80 please answer correctly as it was wrong multiple times. The equipment currently being used is fully depreciated and
the net present value is not -$131,272.80 please answer correctly as it was wrong multiple times.
The equipment currently being used is fully depreciated and has no disposal value. The new equipment will cost a total of $230,000. Because the new equipment is self-serve, Sweet will have annual incremental cash savings in labor cifsts of $70,000 per year. The equipment will have a 5 -year useful life and no terininal disposal value. The equipment will be depreciated using the straight-line method. Sweet requires a 6% real rate of return. 1. Given the preceding information, what is the net present value (NPV) of the new equipment? Ignore taxes. 2. Assume the $70,000 cost savings are in current real dollars and the inflation rate is 4%. Recalculate the NPV of the project. 3. Based on your answers to requirements 1 and 2 , should Sweet buy the new checkout equipment? 4. Now assume that the company's tax rate is 28%. Calculate the NPV of the equipment assuming no inflation. 5. Again assuming that the company faces a 28% tax rate, calculate the NPV of the equipment under an inflation rate of 4%. 6. Based on your answers to requirements 4 and 5 , should Sweet buy the new checkout equipment? Sweet is considering replacing 20 of their checkout registers with new self-checkout equipment. (Click the icon to view additional information.) Present Value of $1 table Read the requirements. Requirement 1. Given the preceding information, what is the net present value (NPV) of the new equipment? Ignore taxes. (Round interm to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the in The net present value isStep by Step Solution
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