Calculate the npv

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Kinky Copiesmay buy a high-volume copier.

The machines costs $220,000 and will be depreciated straight-line over 5 years to a salvage value of $40,000.

Kinky anticipates that the machine actually can be sold in 5 years for $48,000. The machine will save $40,000 a year in labor costs but will require an increase in working captial, mainly paper supplies, of $20,000.

The firm's marginal tax rate is 35%, and the discount rate is 6%. (Assume the net working captial will be recovered at the end of year 5)

Calculate the NPV. (Negative amount should be indicated by a minus sign. Do not round intermediate calcuations. Round your answer to 2 decimal places) NPV $__________________ Should Kinky buy the machine? (yes or no)

Reference no: EM131147849

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