Assume that to comply with the Air Quality Control Act of 1989, a company must install three smokestack scrubber units to its ventilation stacks at an installed cost of $335,000 per unit. An estimated $100,000 per unit in fines could be saved each year over the five-year life of the ventilation stacks. The cost of capital is 14% for the firm. 

a) Draw the timeline with the cash flows for the project. 

b) Calculate the NPV of the project and make the decision to accept/reject.

Briefly explain.

Answer rating: 100% (QA)

here is the solution a Timeline with cash flows Year Cash flow 0 1005000 335000 3 1 300000 2 300000 ... View the full answer