Straight line depreciation.

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Reference no: EM13917937

Joe Meat Corp. is considering replacing its old freezer with a new one that has more capacitiy. The company estimates that it can sell more meat products with and estimated increase of $15,000. The new freezer will require $2,500 in maintenance per year, but will have an energy savings of $1,500 per year. The new freezer costs $40,000 and it will have a salvage value of $5,000 after 10 years. What is the net present value of the freezer if the required return is 6% and the income tax rate is 30%? Should the freezer be purchased? Assume straight line depreciation.

Reference no: EM13917937

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