Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on revenues but will save $50,000 in energy costs each year it is used. The system costs $120,000 and will be depreciated on a straight-line basis to $0 over 4 years. The system can be sold after six years for $25,000. If the Tax Rate is 20% and the opportunity cost of capital is 13%, what is the project’s Net Present Value (rounded to the nearest dollar
Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on revenues but will save $50,000 in energy costs each year it is used. The system costs $120,000 and will be depreciated on a straight-line basis to $0 over 4 years. The system can be sold after six years for $25,000. If the Tax Rate is 20% and the opportunity cost of capital is 13%, what is the project’s Net Present Value (rounded to the nearest dollar
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on revenues but will save $50,000 in energy costs each year it is used. The system costs $120,000 and will be
Multiple Choice
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$67,355
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$66,134
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$72,158
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$69,757
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