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XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $49,700.00. It would be depreciated straight-line to
XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $49,700.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-tax cash flow of $13,500.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2 years. With the system, costs are expected to be $79,800.00 in 1 year and $68,800.00 in 2 years. If the tax rate is 45.80% and the cost of capital is 8.20%, what is the net present value of the new interception system project? $10678.17 (plus or minus $50) $7997.90 (plus or minus $50) $9863.17 (plus or minus $50) $6634.74 (plus or minus $50) None of the above is within $50 of the correct
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