Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $6,000 and sell its old washer for $2,000. The new washer will last for 6 years and save $1,500 a year in expenses. The opportunity cost
of capital is 16 percent, and the firm’s tax rate is 40 percent.

a. If the firm uses straight-line depreciation to an assumed salvage value of zero over a 6-year life, what are the cash flows of the project in years 0 to 6? The new washer will in fact have zero salvage value after 6 years, and the old washer is fully depreciated.

b. What is project NPV?

morgaine300

See red note at top of page.

At the top of all the posts, the is a big red thing saying "Announcement" on it. It is at the top of every Homework Help section. These are the rules that were set down for homework.

It is inappropriate to give a negative reputation mark just because you didn't happen to see it. Not to mention that I really rather don't appreciate it!