Tripp Industries is considering buying a new recycling system. The new recycling system would be purchased today for $7,760.00. It would be depreciated straight-line to $1,060.00 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 $1,290.00. The recycling system is expected to reduce costs by $2,810.00 in year 1 and by $8,610.00 in year 2. If the tax rate is 59.00 % and the cost of capital is 7.16%, what is the net present value of the new recycling system project? $426.49 (plus or minus $10) $331.08 (plus or minus $10) $1,078.26 (plus or minus $10) -$2,115.95 (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 $7,760.00. It would be depreciated straight-line to $1,060.00 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 $1,290.00. The recycling system is expected to reduce costs by $2,810.00 in year 1 and by $8,610.00 in year 2. If the tax rate is 59.00 % and the cost of capital is 7.16%, what is the net present value of the new recycling system project? $426.49 (plus or minus $10) $331.08 (plus or minus $10) $1,078.26 (plus or minus $10) -$2,115.95 (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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