MetaCori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,200 per year and will cut annual operating costs by $14,300. The system will cost $ 49,200 to purchase and install. This system is expected to have a 7-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.8 percent. What is the NPV of purchasing the pressure cooker?
MetaCori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,200 per year and will cut annual operating costs by $14,300. The system will cost $ 49,200 to purchase and install. This system is expected to have a 7-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.8 percent. What is the NPV of purchasing the pressure cooker?
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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Transcribed Image Text:MetaCori's Dog House is considering the
installation of a new computerized
pressure cooker for hot dogs. The
cooker will increase sales by $8, 200 per
year and will cut annual operating costs
by $14,300. The system will cost $
49,200 to purchase and install. This
system is expected to have a 7-year life
and will be depreciated to zero using
straight-line depreciation and have no
salvage value. The tax rate is 21 percent
and the required return is 11.8 percent.
What is the NPV of purchasing the
pressure cooker?
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