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Question: Firm ABC is considering investing in a project to reduce costs by $ 50,000 annually. The equipment costs $180,000. had a 4-year life (will be depreciated as a 3-year MACRS asset: 33% for the first year, 45% for the second year, and 15% for the third year), requires no additional investment in net working capital, and has a salvage value of $35.000. The required rate of return is 10%. Tax rate is 34%. What are the NPV and IRR? Do you accept the project? Why?

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Category:- Basic Finance
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