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You have been asked to evaluate the proposed purchase of a new conveyor system. The system's basic price is $95.000, and it will cost another

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You have been asked to evaluate the proposed purchase of a new conveyor system. The system's basic price is $95.000, and it will cost another $13,000 to modify it for special use by your firm. The equipment falls into the MACRS three-year class (33%, 45%, 15%, 7%) and it will be sold after three years for $42,500. Use of the conveyor system will require an increase in net operating working capital (spare parts inventory) of $8,500., recoverable at the end of the project. The equipment will have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 38%. The cost of capital is 9 percent. What is the NPV and should the new conveyor system be purchased? Draw a timeline showing all appropriate cash flows. Be sure to show all your work

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