Question: XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $49,800. It would be depreciated straight-line to

XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $49,800. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-tax cash flow of $14,600. Without the system, costs are expected to be $100,000 in 1 year and $100,000 in 2 years. With the system, costs are expected to be $77,800 in 1 year and $64,800 in 2 years. If the tax rate is 47.50% and the cost of capital is 8.30%, what is the present value of the new interception system project?

A.13544.75

B. 14472.23

C.11686.91

D.10170.76

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