Kwik Dry Cleaning Service is considering the purchase of a new industrial washer. It can purchase the
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Question:
Kwik Dry Cleaning Service is considering the purchase of a new industrial washer. It can purchase the washer for $20,000. The new washer will last for 5 years and save $8000 a year in expenses. The opportunity cost of capital is 15 percent, and the firm's tax rate is 40 percent.If the firm uses straight-line depreciation to an assumed salvage value of zero over a 5-year life and if the new washer will in fact have zero salvage value after 5 years what is project NPV? Would you accept the project?
Question 28 options:
NPV = -$1,227.93, reject
NPV = $13,408.62, accept
NPV = $1,265.22, accept
NPV = $1,453.79, accept
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