Kinky Copies may buy a high-volume copier. The machine costs $160,000 and this cost can be fully
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Kinky Copies may buy a high-volume copier. The machine costs $160,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually can be sold in 5 years for $38,000. The machine will save $28,000 a year in labor costs as an after-tax reduction but will require an increase in working capital, mainly paper supplies, of $14,000. The firm’s marginal tax rate is 21%, and the discount rate is 6%. (Assume the net working capital will be recovered at the end of Year 5.) .
What is the NPV of this project?
Related Book For
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
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