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XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $50,000.00. 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 $50,000.00. 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 $12,700.00. 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 $87,400.00 in 1 year and $67,300.00 in 2 years. If the tax rate is 49.70% and the cost of capital is 8.80%, what is the net present value of the new interception system project? 

 


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