New equipment costs $700,000 and is expected to last for four years with no salvage value. During this time the company will use a 30% CCA rate. The new equipment will save $550,000 annually before taxes. If the company's required rate of return is 15%, determine the NPV of the purchase. Assume a tax rate of 35%. $450,005 $461,112 $473,336 $485,550 $497,668
New equipment costs $700,000 and is expected to last for four years with no salvage value. During this time the company will use a 30% CCA rate. The new equipment will save $550,000 annually before taxes. If the company's required rate of return is 15%, determine the NPV of the purchase. Assume a tax rate of 35%. $450,005 $461,112 $473,336 $485,550 $497,668
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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