21. A store is consiering the installation ofa processing and refrigeration syst

Question

21. A store is consiering the installation ofa processing and refrigeration system which costs $445,000. System will save 90,000 every year in pre tax operating costs. Intial working capital investment will be 32,000. The system will be depreciated straigh line to zero over the 6 year life of the system. The production engineers believe the system can be scrapped for 40,000 at the end of it's useful life. If the company has a 40% tax rate and the project requires a 13% cost of capital what is the NPV of the project?

a)-118,728

b)-140,412

c)-121,155

d)-121,995

e)-115,639

Explanation / Answer

c)-121,155

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