Mrs. Bean is considering adding a machine to her operation. The machine she wants would cost $35,000, would be depreciated on a straight line basis over the 4-year life, and would have zero salvage value. Bean estimates the income from the machine would be $33,000 a year with $12,000 of that amount being variable cost. The fixed cost would be $7,250. Bean feels that the machine would net her, after costs, an additional $10,000 in revenue from her operation. The project will require $1,000 of net working capital which is recoverable at the end of the project What is the net present value of this project at a discount rate 12% and a tax rate of 21% ?

Answer rating: 100% (QA)

To calculate the net present value NPV of the project you can use the following formula NPV CFt 1 rt ... View the full answer