If Lew's Steel Forms purchases $654,000 of new equipment, they can lower annual operating costs...
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If Lew's Steel Forms purchases $654,000 of new equipment, they can lower annual operating costs by $355,000. The equipment will be depreciated straight-line to a zero book value over its 3-year life. Ignore bonus depreciation. At the end of the three years, the equipment will be sold for an estimated $30,000. The equipment will require the company to hold an extra $131,000 of inventory over the 3-year period. What is the NPV if the discount rate is 16 percent and the tax rate is 21 percent?
NPV =
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