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Calculate the npv for cost-cutting proposal

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Reference no: EM132589507

Question 1: You are considering investing in a piece of equipment to implement a cost-cutting proposal. The pre-tax cost reduction is expected to equal $41.67 for each of the three years of the project's life. The equipment has an initial cost of $125 and belongs in a 20% CCA class. Assume a 34% tax bracket, a discount rate of 15%, and a salvage value of zero.

If the equipment is sold to another company at the end of year 3 for $20, calculate the NPV?

Reference no: EM132589507

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