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a university student painter is considering the purchase of a new air compressor and paint gun...
a university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. (Both items belong to Class 9 and have a 25% CCA rate.) These two new items cost $13,100 and have a useful life of four years, at which time they can be sold for $2,700. The old paint sprayer can be sold now for $610 and could be scrapped for $360 in four years. The entrepreneurial student believes that operating revenues will increase annually by $9,100. The tax rate is 22% and the required rate of return is 15%.
What is the NPV of the new equipment? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
NPV $
Should the purchase be made?
-
Yes
-
No
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
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jeff jeffy answered 1 year agoRelated Solutions
A university student painter is considering the purchase of a new air compressor and paint gun...
A university student painter is considering the purchase of a
new air compressor and paint gun to replace an old paint sprayer.
(Both items belong to Class 9 and have a 25% CCA rate.) These two
new items cost $13,900 and have a useful life of four years, at
which time they can be sold for $3,500. The old paint sprayer can
be sold now for $690 and could be scrapped for $440 in four years.
The entrepreneurial student believes...
A university student painter is considering the purchase of a new air compressor and paint gun...
A university student painter is considering the purchase of a
new air compressor and paint gun to replace an old paint sprayer.
(Both items belong to Class 9 and have a 25% CCA rate.) These two
new items cost $13,700 and have a useful life of four years, at
which time they can be sold for $3,300. The old paint sprayer can
be sold now for $670 and could be scrapped for $420 in four years.
The entrepreneurial student believes...
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