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MCS,MBA(IT), Pursuing PHD
Devry University
Sep-2004 - Aug-2010
Assistant Financial Analyst
NatSteel Holdings Pte Ltd
Aug-2007 - Jul-2017
A new electronic process monitor costs $609,000. This cost could be depreciated at 30 percent per year (Class 10). The monitor could actually be worthless in 5 years. The new monitor would save us $338,000 per year before taxes and operating costs.
a/ If we require a 12% return, what is the NPV purchase? Assume tax rate 25%
Â
b/ In the previous qestion, suppose the new monitor also requires use to increase net working capital by $36800 when we buy it. Further suppose that the monitor could actually be worth $118000 in 5 yrs, What is the NPV?
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