Find the NPV of the project

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Reference no: EM133061990

Question - The Canton Sundae Corporation is considering the replacement of an existing machine. The new machine, called an X-tender, would provide better sundaes, but it costs $120,000. The X-tender requires $20,000 in additional net working capital, which will be recouped at the end of the project. The machine's useful life is 10 years, after which it can be sold for a salvage value of $40,000. Straight-line depreciation will be used and the machine will be depreciated to zero over the 10-year project. The tax rate is 45% and the required return is 16%. The machine is expected to increase "sales minus costs" by $35,000 per year. What formula would you use to find the NPV of the project?

Reference no: EM133061990

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