Creighton Industries is considering the purchase of a new strapping machine, whi

Question

Creighton Industries is considering the purchase of a new strapping machine, which will cost $120,000, plus an additional $7,500 to ship and install. The new machine will have a 5-year useful life and will be depreciated to zero using the straight-line method. The machine is expected to generate new sales of $25,000 per year and is expected to save $17,000 in labor and electrical expenses over the next 5-years. The machine is expected to have a salvage value of $30,000. Creighton's income tax rate is 40%. Creighton uses a 13.5% discount rate for capital budgeting purpose. What is the machine's NPV? show work

a) $12,153 b) $5,062 c) $8,888 d) $25,000

Explanation / Answer

b) $5,062

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.