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problem: Creighton Industries is considering the buy of new strapping equipment, which will rate $120,000, plus an additional $7,500 to ship & install. The new equipment will have a five year useful life and will be depreciated to zero using the straight line method. The equipment is expected to create new sales of 25,000 dollar every year and is expected to save $17,000 in labor and electrical expenses over the next 5-years. The equipment is expected to have a salvage value of $30,000. Creighton uses a 13.5% discount rate for capital budgeting purposes and the firm's income tax rate is 40%. find out the equipment's NPV?

[A] $12,153

[B] $25,000

[C] $8,888

[D] $5,062

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  • Category:- Basic Finance
  • Reference No.:- M919450

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