Pizza planet co paid a consultant to study the desirability, Ask an Expert

Finance

Pizza Planet Co. paid a consultant to study the desirability of installing some new equipment. The consultant submitted the following analysis:

Cost of new equipment $50,000

Present value of after-tax revenues from operation $45,000

Present value of after-tax operating expenses $10,000

Present value of depreciation expenses $43,750

Consulting fees and expenses $375

The corporate tax rate is 40%. Explain whether Pizza Planet Co. should install the new equipment. Justify your response with supportive examples and references.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92762610

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