Question: Printing World thinks it may need a new colour printing press. The press will cost $460,000 but will substantially reduce annual operating costs by $178,000

Printing World thinks it may need a new colour printing press.

Printing World thinks it may need a new colour printing press. The press will cost $460,000 but will substantially reduce annual operating costs by $178,000 a year, before tax. The press has a 30% CCA rate and will be in its own asset pool. The first CCA deduction is made in year 0. The press will operate for 4 years and then be worthless. The cost of equity for Printing World is 10%, the cost of debt is 8%, and the company's target debt-equity ratio is 0.50. The company's tax rate is 30%. a. What is the NPV of buying the press? (Do not round intermediate calculations. Round your answer to the nearest dollar.) NPV of buying the press $ b. The equipment manufacturer is offering to lease the press for $113,000 a year, for 4 years, payable in advance. Should Printing World accept the offer? Printing World should (Click to select the project. Printing World thinks it may need a new colour printing press. The press will cost $460,000 but will substantially reduce annual operating costs by $178,000 a year, before tax. The press has a 30% CCA rate and will be in its own asset pool. The first CCA deduction is made in year 0. The press will operate for 4 years and then be worthless. The cost of equity for Printing World is 10%, the cost of debt is 8%, and the company's target debt-equity ratio is 0.50. The company's tax rate is 30%. a. What is the NPV of buying the press? (Do not round intermediate calculations. Round your answer to the nearest dollar.) NPV of buying the press $ b. The equipment manufacturer is offering to lease the press for $113,000 a year, for 4 years, payable in advance. Should Printing World accept the offer? Printing World should (Click to select the project

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