What is the net present worth of the project

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Reference no: EM13184070

A special-purpose machine tool set would cost $30,000. The entire capital expenditure ($30,000) is to be borrowed with the stipulation that it be repaid by two equal end of year payments at 15% compounded annually. The tool is expected to provide annual savings (in material) of $45,000 for two years and is to be depreciated by the MACRS three-year recovery period. This special machine tool will require annual O&M costs in the amount of $12,000. The salvage value at the end of two years is expected to be $9,000. Assuming a marginal tax rate of 40% and MARR of 15%, what is the net present worth of this project?

Reference no: EM13184070

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