Question: Question 30 Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 19,600 dollars. It would be depreciated

Question 30

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 19,600 dollars. It would be depreciated straight-line to 1,200 dollars over 2 years. In 2 years, the system would be sold and the after-tax cash flow from capital spending in year 2 would be 2,200 dollars. The system is expected to reduce costs by 8,200 dollars in year 1 and by 13,700 dollars in year 2. If the tax rate is 50 percent and the cost of capital is 9.67 percent, what is the net present value of the new purification system project?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

- Question 29 What is the NPV of project A? The project would require an initial investment in equipment of 44,000 dollars and would last for either 3 years or 4 years (the date when the project ends...

#30 Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 17,800 dollars. It would be depreciated straight-line to 1,200 dollars over 2...

30. Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 20,000 dollars. It would be depreciated straight-line to 2,000 dollars over 2...

3 A. Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 16,000 dollars. It would be depreciated straight-line to 1,200 dollars over 2...

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 15,800 dollars. It would be depreciated straight-line to 2,200 dollars over 2 years....

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 19,800 dollars. It would be depreciated straight-line to 1,400 dollars over 2 years....

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 19,600 dollars. It would be depreciated straight-line to 1,000 dollars over 2 years....

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 17,800 dollars. It would be depreciated straight-line to 2,000 dollars over 2 years....

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 20,200 dollars. It would be depreciated straight-line to 2,000 dollars over 2 years....

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 17,600 dollars. It would be depreciated straight-line to 1,600 dollars over 2 years....

Sarah Ann from Earnest & Young, is the auditor for Axis Tech Sdn Bhd (Axitec). She and her team are at the completion phase of the audit work. While reviewing all audit files, Sarah Ann made sure...

Complete the I-9 for employment at Excelsior College. Be sure to complete the "preparer" section. Meaghan Ariel Lambert Maiden name: Smith Social Security number: 123-45-6789 Date of Birth: 7-1-1984...

True or False. Most of you young folks (including old Doc White) should NOT plan on getting any retirement funds from Social Security when you retire. You should plan on funding your retirement...

Look at the four examples and identify in which category/account these transactions are recorded in our balance of payments. 1. A Canadian company in exports timber to Germany . The company uses a...