Troy Barnes, P . Eng, is evaluating a proposal for new equipment that will generate process improvements for the production of Air Conditioning Units at his company, Greendale AC Ltd . The initial cost is $ 5 0 0 , 0 0 0 and is expected to provide labour savings of $ 1 3 0 , 0 0 0 / year , but will incur additional maintenance costs of $ 1 0 , 0 0 0 / year . The equipment is expected to last 5 years. The company uses a minimum acceptable rate of return of 1 0 % when evaluating a potential investment. If the company s tax rate is 2 5 % , what are the after - tax cash flows and the Net Present Value of this investment? Is this investment worth pursuing?. 

Answer rating: 100% (QA)

To calculate the aftertax cash flows and the Net Present Value NPV of this investment we need to fir... View the full answer