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Should mjj proceed with the new project

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Question - MasonJar Juice (MJJ) is considering a new capital project investing in new machinery ' to bottle it's healthy drinks. The project would involve an investment of $1.1 million for the new equipment but the company expects to generate additional revenues of 220K each year for the next 7 years.

After seven years, the company will sell (salvage} the machinery for $275,000. No working capital is required for this project. MJJ's cost of capital is 9% and it has .a tax rate of 25%. The machinery is considered Class 8 which receives a 20% CCA allowance. What Is the NPV? Should MJJ proceed with the new project?

Reference no: EM133165370

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