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A special-purpose machine tool set would cost $25,000. The tool set will be financed by a $10,000 bank loan repayable in two equal annual installments at 8% compounded annually. The tool is expected to provide annual (material) savings of $30,000 for two years and has a CCA rate of 100%. The tool will require annual O&M costs in the amount of $5,000. The salvage value at the end of the two years is expected to be $8,000. Assuming a marginal tax rate of 40% and MARR of 15%, what is the net present worth of this project?

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Financial Management, Finance

Category:- Financial Management
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