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Management is contemplating the purchase of a new oven which cost $25,000.00 with an estimated salvage value of zero. Expected before tax cash savings from the new oven are $4,000 a year over its full depreciable life. Depreciation is computed using straight line over a 5 year life, and the cost of capital is 10%. At the end of the oven's life, it can be sold for 2,000. Assume a 40% tax rate.

What is the net present value of the new oven IRR?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93044820

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