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Toronto Food Services is considering installing a new refrigeration system that will cost $500,000. The system will be depreciated at a rate of 20% (Class
Toronto Food Services is considering installing a new refrigeration system that will cost $500,000. 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 $70,000. The new system will save $250,000 per year in pre-tax operating costs. An initial investment of $60,000 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.
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