You need to solve this exercise using Excel functions. (Please show work on excel) ABC Inc. plans to invest in new equipment. It will purchase the new equipment for $130,000 and sell its old version, which is fully depreciated, for $25,000. The new equipment has a 10-year useful life and will save $45,000 a year in expenses before tax. The opportunity cost of capital is 11%, and the firm’s tax rate is 21%. What is the NPV of this investment if ABC can benefit from bonus depreciation?

You need to solve this exercise using Excel functions. (Please show work on excel) ABC Inc. plans to invest in new equipment. It will purchase the new equipment for $130,000 and sell its old version, which is fully depreciated, for $25,000. The new equipment has a 10-year useful life and will save $45,000 a year in expenses before tax. The opportunity cost of capital is 11%, and the firm’s tax rate is 21%. What is the NPV of this investment if ABC can benefit from bonus depreciation?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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