What is the net present value of the project

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Question - Pfizer Pharmaceutical Company may spend $60,000 on COVID-19 testing equipment. This device is estimated to save healthcare personnel $20,000 per year in labor expenditures. Although the equipment has a five-year useful life, it is classified as a three-year property for cost recovery (depreciation) purposes. At the end of the day, no salvage value is predicted. Pfizer pays a total federal and state corporate tax rate of 38 percent, with a 15 percent minimum rate of return. (If the project's profits after taxes are negative in any given year, the loss will be offset against other firm revenues for that year.) What is the net present value of the project based on this information? Is it acceptable?

Reference no: EM133018361

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