Lipper & Garden is looking at a new flower processing system with an installed cost of $304,000. They expect the system can considerably speed up the process of cutting, de-leafing, binding, collecting etc. This cost will be depreciated straight-line to zero over the project's five year life, at the end of the system can be scrapped for $30,000. The flower processing system will save the firm $116,000 per year in pretax operating cost s and the system requires an initial investment in net working capital of $15,000. If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV of this project? Hint! (PVIFA10% 5) = 3.7908

Lipper & Garden is looking at a new flower processing system with an installed cost of $304,000. They expect the system can considerably speed up the process of cutting, de-leafing, binding, collecting etc. This cost will be depreciated straight-line to zero over the project's five year life, at the end of the system can be scrapped for $30,000. The flower processing system will save the firm $116,000 per year in pretax operating cost s and the system requires an initial investment in net working capital of $15,000. If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV of this project? Hint! (PVIFA10% 5) = 3.7908

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 13P

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