28. Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 220,000 dollars today. The equipment would be depreciated straight-line to 40,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 48,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 159,000 dollars and relevant costs are expected to be 67,000 dollars. The tax rate is 50 percent and the cost of capital for the project is 10.28 percent. What is the NPV of the project?

29. What is the NPV of project A? The project would require an initial investment in equipment of 48,000 dollars and would last for either 3 years or 4 years (the date when the project ends will not be known until it happens and that will be when the equipment stops working in either 3 years from today or 4 years from today). Annual operating cash flows of 16,320 dollars per year are expected each year until the project ends in either 3 years or 4 years. In 1 year, the project is expected to have an after-tax terminal value of 38,726 dollars. The cost of capital for this project is 9.66 percent.

30. Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 20,200 dollars. It would be depreciated straight-line to 2,000 dollars over 2 years. In 2 years, the system would be sold and the after-tax cash flow from capital spending in year 2 would be 3,100 dollars. The system is expected to reduce costs by 7,800 dollars in year 1 and by 15,200 dollars in year 2. If the tax rate is 50 percent and the cost of capital is 10.2 percent, what is the net present value of the new purification system project?

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 220,000 dollars today. The equipment would be depreciated straight-line to 40,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 48,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 150,000 dollars and relevant costs are expected to be 67.000 dollars. The tax rate is 50 percent and the cost of capital for the project is 10.28 percent. What is the NPV of the project? Number What is the NPV of project A? The project would require an initial Investment in equipment of 48,000 dollars and would last for either 3 years or 4 years (the date when the project ends will not be known until it happens and that will be when the equipment stops working in either 3 years from today or 4 years from today). Annual operating cash flows of 16,320 dollars per year are expected each year until the project ends in either 3 years or 4 years. In 1 year, the project is expected to have an after-tax terminal value of 38,726 dollars. The cost of capital for this project is 9.66 percent. Number Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 20.200 dollars. It would be depreciated straight-line to 2,000 dollars over 2 years. In 2 years, the system would be sold and the after-tax cash flow from capital spending in year 2 would be 3,100 dollars. The system is expected to reduce costs by 7,800 dollars in year 1 and by 15,200 dollars in year 2. If the tax rate is 50 percent and the cost of capital is 10.2 percent, what is the net present value of the new purification system project? Number