FITCO is considering the purchase of new equipment. The equipment costs $326000, and an additional $106000 is needed to install it.The equipment will be depreciated straight-line to zero over a 5-year life. The equipment will generate additional annual revenues of$274000, and it will have annual cash operating expenses of $81000. The equipment will be sold for $84000 after 5 years. Aninventory investment of $72000 is required during the life of the investment. FITCO has a marginal tax rate of 28 percent, and its costof capital is 10 percent. What is the project NPV?O $159299.O $177613.O $196734.O $141983.

Net Present Value (NPV) is a financial measure that calculates the present value of future cash…

Answered: FITCO is considering the purchase of…

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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