Harriet Harvester (HH) plans to buy a haymaker. It costs $180,000 and is expected to last for five years. She presently hires 10 workers at $3,000 per month for each of the six harvesting months each year. The equipment would eliminate the need for six workers. HH uses straight-line depreciation and projects a salvage value of $23,000. Her tax rate is 21% and opportunity cost of funds is 8.0%. Which is true?

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  The present value of cash flows in year 5 is $24,466

• NPV is −$24,466

• NPV is $155,534

• NPV is −$155,534

• None of the above

Answer rating: 100% (QA)

ANSWER NPV is 155534 CALCULATION PV of cash flows in year 5 24466 ... View the full answer