Goldsmith labs recovers gold from printed circuit boards it

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Goldsmith Labs recovers gold from printed circuit boards. It has developed new equipment for this purpose. You have the following data.

1) The equipment costs $250,000.

2) It costs $200,000 per year to operate.

3) It has an economic life of five years and is depreciated using the straight-line method.

4) It will recover 300 ounces of gold per year.

5) The current price of gold is $900 per ounce and is expected to increase at a rate of 4% per year for the foreseeable future.

6) The tax rate is 30%.

7) The cost of capital is 8%.

What is the NPV of installing this equipment?

$430,400

$520,510

$470,400

$195,911

Reference no: EM13572087

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