(Answered) The hobbit company ltd is considering replacing the

Finance

The Hobbit Company Ltd is considering replacing the equipment it uses to produce tents. The equipment would cost $1.4 million and lower manufacturing costs by an estimated $215,000 a year. The equipment will be depreciated using straight-line depreciation to a book value of zero. The life of the equipment is 8 years. The required rate of return is 13% and the tax rate is 34%. What is the net profit after tax from this proposed project?

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