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Glickleys Financial is considering some new equipment. The equipment's price is $10,000, and it would cost another $2,000 to modify it for special use. The equipment depreciates straight line to 0 over its 4-year economic life, but will be sold after 3 years for $400. The new equipment will have no effect on revenues, but it is expected to save the firm $3,000 per year in before-tax operating costs. Glickleys marginal tax rate is 28%, and the managers estimate its cost of capital to be 9 %. What is the project's NPV? A -3535 B 4705 C 4277 D -4277 E-3889

Glickleys Financial is considering some new equipment. The equipment's price is $10,000, and it would cost another $2,000 to modify it for special use. The equipment depreciates straight line to 0 over its 4-year economic life, but will be sold after 3 years for $400. The new equipment will have no effect on revenues, but it is expected to save the firm $3,000 per year in before-tax operating costs. Glickleys marginal tax rate is 28%, and the managers estimate its cost of capital to be 9 %. What is the project's NPV? A -3535 B 4705 C 4277 D -4277 E-3889

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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Glickleys Financial is considering some new equipment. The equipment's price is $10,000, and it would cost another $2,000 to modify it for special use. The equipment depreciates straight line to 0 over its 4-year economic life, but will be sold after 3 years for $400. The new equipment will have no effect on revenues, but it is expected to save the firm $3,000 per year in before-tax operating costs. Glickleys marginal tax rate is 28%, and the managers estimate its cost of capital to be 9 %. What is the project's NPV?

 
A -3535
B 4705
C 4277
D -4277
E-3889  
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