Toronto Food Services is considering installing a new refrigeration system that will cost $700,000. The system will
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Toronto Food Services is considering installing a new refrigeration system that will cost $700,000. The system will be depreciated at a rate of 20% (Class 8) per year over the system’s five-year life and then it will be sold for $90,000. The new system will save $250,000 per year in pre-tax operating costs. An initial investment of $70,000 will have to be made in working capital. The tax rate is 35% and the discount rate is 10%. Calculate the NPV of the new refrigeration system.
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Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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