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  • Feb 6, 2011, 12:20 PM
    momi17s
    Replacement project NPV calculation
    Can you please help me solve this problem: A firm is considering the cost-saving project of replacing an existing copier with a new copier.The existing copier was purchased 8 years ago for $ 100,000 and was expected to last 20 years over which straight-line amortization was used. This existing copier can now be sold for its book value.The new machine costs $120,000,will last 12 years,and is expected to save the firm $20,000 each year before taxes. Assuming a tax rate of 34%, a discount rate of 10% and a zero salvage value for the new machine at the end of its life,what is the NPV for this project? Thanks

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