After completing her analysis, she learned from another publisher that these binding machines, although a necessary part of her business, required considerable maintenance. Rochelle got a maintenance quote of $276/year for the anticipated 5-year ownership period, whereas the maintenance was already included in the Swift 5-year lease price. Rochelle recalled that her initial "pre-maintenance" NPV for purchasing the binding machined was -$28,479.

What is the REVISED NPV of the Purchase Option, once again assuming a cash tax rate of 25% and a discount rate of 7.95%?

Answer rating: 100% (QA)

To calculate the revised Net Present Value NPV of the purchase option we need to consider the mainte... View the full answer