Your company is required to purchase a new safety system, which costs $100000 to purchase and install, has a lifetime of 10 years, and has no salvage value. It will require an overhaul in five years at a cost of $30000. Annual operating and maintenance costs will be $15000 per year for the first 5 years and will increase to $25000 per year for the remaining life (including the 10th year). Assume that the annual interest rate is 6%. What is the net present value of this system?

Answer rating: 100% (QA)

To calculate the net present value of the safety system we need to discount the cash flows to their ... View the full answer