Question $3(6$ points$)$

What is the PV of the after tax EBIDTAs for the following replacement project?

The new equipment will be depreciated down to zero using straight$-$line depreciation over its $10-$year life. The

project is a $10-$year project. The market value of the new equipment at the end of year $10$ is expected to be $0.$ The

new equipment will replace an existing old equipment that has $10$ years left of depreciation at a $$4,000$ a year. The

estimated before tax proceeds from selling this existing equipment is $$24,000$ today. The market value in $10$ years

for this old equipment would be $0.$ The new equipment will generate annual cost savings of $$14,000$ before taxes.

The tax rate is $40\%$ and the discounting rate is $15\%.$

For your answer, round to the nearest dollar $($no need to enter decimals$),$ DO NOT use commas, do not use the dollar

$($ $ $)$ sign, and if the cash flow is negative enter the $(-)$ sign in front of the first digit

Your Answer: