The local franchise of Jiffy Lube is thinking of buying a new lift for $90,000...
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Accounting
The local franchise of Jiffy Lube is thinking of buying a new lift for $90,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business:
A
B
C
D
1
Year
1
2
3
2
Cost savings
40,000
44,000
52,800
The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 12% and has a tax rate of 21%.
Attempt 1/5 for 10 pts.
Part 1
What is the free cash flow in year 3?
Submit
Attempt 1/5 for 10 pts.
Part 2
What is the NPV?
Answer & Explanation
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