Rader Railway is determining whether to purchase a new rail setter, which has a base price of
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Question:
Rader Railway is determining whether to purchase a new rail setter, which has a base price of $ and would cost another $ to install. The setter will be depreciated according to the MACRS year class of assets, and it would be sold after three years for $ Using the setter requires a $ increase in net working capital. Although it would have no effect on revenues, the setter should save the firm $ per year in beforetax operating costs excluding depreciation Rader's marginal tax rate is percent, and its required rate of return is percent. Should the setter be purchased? Do not round intermediate calculations. Round your answer to the nearest cent. Use a minus sign to enter a negative value, if Any.
The setter should be purchased because the net present value, that is $ is greater than zero.
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