What is the after tax pv of this proposed investment

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Liberty Airways is considering an investment of $800,000 in ticket purchasing kiosks at selected airports. The kiosks have an expedited life of four years. Extra ticket sales are expected to be $60,000 per year at a discount price of $40 per ticket. Fixed costs, excluding depreciation of the equipment are $400,000 per year, and variable cost is $24 per ticket. The kiosks will depreciate over four years using the SL method with a zero salvage value. The onetime commitment of working capital is expedited to be 1/12 of annual sales dollars. The after tax MARR is 15% per year and the company pays income tax at the rate of 34%. What is the after tax PV of this proposed investment? Should the investment be made?

Reference no: EM13733555

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