Question
Toronto Food Services is considering installing a new refrigeration system that will cost $700,000. The system will be depreciated at a rate of 20% (Class
Toronto Food Services is considering installing a new refrigeration system that will cost $700,000. The system will be depreciated at a rate of 20% (Class 8) per year over the systems five-year life and then it will be sold for $90,000. The new system will save $250,000 per year in pre-tax operating costs. An initial investment of $70,000 will have to be made in working capital. The tax rate is 35% and the discount rate is 10%. Calculate the NPV of the new refrigeration system. You must show all of your calculations for full marks. You can either enter them in the space provided
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