Great northern fishing company

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Reference no: EM13954829

Great Northern Fishing Company is contemplating the purchase of a new smoker. The smoker will cost $61,800 but will generate additional revenue of $34,000 per year for 6 years. Additional costs, other than depreciation, will equal $11,400 per year. The smoker has an expected life of 6 years, at which time it will have no residual value. Great Northern uses the straight-line method of depreciation for tax purposes. Determine the net present value of the investment if the required rate of return is 12 percent and the tax rate is 30 percent.

Round present value factor calculations to 4 decimal places, and final answer to 0 decimal places, Enter negative amounts using either a negative sign preceding the number or parentheses Net present value $

Should Great Northern make the investment in the smoker?

Reference no: EM13954829

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