Assume the net working capital will be recovered at the end

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Kinky Copies may buy a high-volume copier. The machine costs $210,000 and will be depreciated straight-line over 5 years to a salvage value of $38,000. Kinky anticipates that the machine actually can be sold in 5 years for $49,000. The machine will save $38,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $19,000. The firm’s marginal tax rate is 35%, and the discount rate is 7%. (Assume the net working capital will be recovered at the end of Year 5.) Calculate the NPV.

Reference no: EM13878796

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Assume the net working capital will be recovered at the end : Kinky Copies may buy a high-volume copier. The machine costs $210,000 and will be depreciated straight-line over 5 years to a salvage value of $38,000. Kinky anticipates that the machine actually can be sold in 5 years for $49,000. The firm’s margina..

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