Rymer,Inc. is conidering a new assembler,which costs $180,000 installed,and has a depreciable life of 5 years.

Question

The expected annual after-tax cash flows for the assembler are $60,000 in each of the 5 years and nothing thereafter.Calculate the net present value (NPV) of the assembler if the required rate of return is 14 percent.Round to the nearest ten dollars.

Answer 1

NPV = $25,980.

Invest. of $180,000 - after tax cash flows of $205,980 = $25,980.