Question: A digital assembly system that costs $160,000 is expected to operate for 8 years. The estimated salvage value at the end of 8 years is

A digital assembly system that costs $160,000 is expected to operate for 8 years. The estimated salvage value at the end of 8 years is $12,000. The system is expected to save the company $38,000 in labor costs before taxes and depreciation. The company will depreciate this system on a 5-year MACRS schedule. If the firm's cost of capital is 12% and its marginal tax rate is 35%, compute the NPV for the project.

$167,196

$20,873

$4,045

$7,196

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