Given the following capital budgeting assumptions:Yearly old operating cost21,000Yearly old depreciation cost2,000Yearly old maintenance cost12,000Yearly old tax payment7,000Yearly new operating cost15,000Yearly new depreciation cost3,500Yearly new maintenance cost13,500Yearly new tax payment9,000Tax Rate25%Discount Rate15%Project Investment45,000Project Life6 уearsWhat is the Net Present Value (NPV) of the yearly (annual) capital budgeting cost?

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What is the Net Present Value (NPV) of the yearly (annual) capital budgeting cost?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 1PROB

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Question

Given the following capital budgeting assumptions:
Yearly old operating cost
21,000
Yearly old depreciation cost
2,000
Yearly old maintenance cost
12,000
Yearly old tax payment
7,000
Yearly new operating cost
15,000
Yearly new depreciation cost
3,500
Yearly new maintenance cost
13,500
Yearly new tax payment
9,000
Tax Rate
25%
Discount Rate
15%
Project Investment
45,000
Project Life
6 уears
What is the Net Present Value (NPV) of the yearly (annual) capital budgeting cost?

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