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Compute the NPV considering the depreciation tax shield

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Question - Lymbo Company, must install safety devices throughout its plant or it will lose its insurance coverage. The safety device costs $91 000 to install and $20 000 to maintain annually. The safety device has a 7-year income tax life and a 13-year useful life. Lymbo's discount rate is 11 per cent, its marginal tax rate is 30 per cent and it uses straight-line depreciation. Compute the NPV considering the depreciation tax shield?

Reference no: EM133124300

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