Tripp Industries is considering buying a new recycling system. The new recycling system would be purchased today for $7,700.00. It would be depreciated straight-line to $1,020.00 over 2 years. In 2 years, the recycling system would be sold and the after-tax cash flow from capital spending in year 2 would be $1,270.00. The recycling system is expected to reduce costs by $2,730.00 in year 1 and by $8,630.00 in year 2. If the tax rate is 52.00% and the cost of capital is 7.73%, what is the net present value of the new recycling system project? $106.43 (plus or minus $10) $191.35 (plus or minus $10) $1,288.60 (plus or minus $10) -$2,245.85 (plus or minus $10) None of the above is within $10 of the correct answer
Tripp Industries is considering buying a new recycling system. The new recycling system would be purchased today for $7,700.00. It would be depreciated straight-line to $1,020.00 over 2 years. In 2 years, the recycling system would be sold and the after-tax cash flow from capital spending in year 2 would be $1,270.00. The recycling system is expected to reduce costs by $2,730.00 in year 1 and by $8,630.00 in year 2. If the tax rate is 52.00% and the cost of capital is 7.73%, what is the net present value of the new recycling system project? $106.43 (plus or minus $10) $191.35 (plus or minus $10) $1,288.60 (plus or minus $10) -$2,245.85 (plus or minus $10) None of the above is within $10 of the correct answer
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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