Question

Commodity Copper is considering the installation of a $ 1,800,000 production conveyor system that would generate the following labor cost savings over its 10-year life:
Years Annual Labor Cost Savings
1–2 ......... $280,000
3–5 ......... 340,000
6–8 ......... 288,800
9–10 .......... 260,000
The system will have no salvage at the end of its 10-year life, and the company uses a discount rate of 12 percent. What is the pre-tax net present value of this potential investment?



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  • CreatedJune 03, 2014
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