A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 94186.67 ☑

A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 94186.67 ☑

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Description: A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor wouldactually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Sup

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $194719.60
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. The new monitor requires us to increase net working capital by $47,200 when we buy it. Assume a tax rate of 40% and a 15% return. a. Suppose the monitor was assigned a 25% CCA rate. Calculate the new NPV. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) ***NOTE*** Hello, I found an answer key saying the answer is $180,108.50. Hopefully this helps for reference when solving for it. Thanks:)
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. The new monitor requires us to increase net working capital by $47,200 when we buy it. Assume a tax rate of 40%. a. If we require a 15% return, what is the NPV of the purchase? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ b. Suppose the monitor was assigned a 25% CCA rate. Calculate the new NPV. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV S C. Will the NPV at 25% CCA rate be larger or smaller? multiple choice Smaller Larger
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