Considering buying new purification system

Assignment Help Financial Management

Reference no: EM132031822

Oxygen Optimization is considering buying a new purification system. The new system would be purchased today for 20,000 dollars. It would be depreciated straight-line to 1,600 dollars over 2 years. In 2 years, the system would be sold and the after-tax cash flow from capital spending in year 2 would be 2,200 dollars. The system is expected to reduce costs by 7,000 dollars in year 1 and by 13,900 dollars in year 2. If the tax rate is 50 percent and the cost of capital is 6.29 percent, what is the net present value of the new purification system project?

Reference no: EM132031822

Questions Cloud

General cash offering to raise needed funds : The company will sell new shares of equity via a general cash offering to raise the needed funds.

Discuss research findings on cultural differences : Create an 8- to 10-slide Microsoft® PowerPoint®, research-based presentation to help employees understand cultural differences in the expression of emotion.

What profit do you actually expect : Assuming you could get 1,150 shares in Woods and 1,150 shares in McIlroy, what would your profit be? What profit do you actually expect?

Capital structure consists solely of debt and common equity : Hook Industries' capital structure consists solely of debt and common equity. What percentage of the company's capital structure consists of debt?

Considering buying new purification system : Oxygen Optimization is considering buying a new purification system. what is the net present value of the new purification system project?

Michael is the tax matters partner : Michael is the Tax Matters Partner (TMP). Both Michael and Devontae are active in the business and work full-time for AAA.

Write an operating plan for google : Implementation. (Read, then delete: Note that this section anticipates likely internal challenges that will be faced as reactions to the AHROP

What would be the company cost of capital : What would be the company’s cost of capital if it were exempted from corporate tax?

Discuss type of communication within an organization : The type of communication within an organization can be seen as dependent on what is being communicated and whom the communications is between.

User Account

All Pages