What is the NPV of buying the new lathe

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Reference no: EM131865043

lana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.5 million. The lathe will cost $50,000 per year to run, but it will save the firm $160,000 in labor costs and will be useful for 10 years. Suppose that for tax purposes, the lathe will be depreciated on a straight-line basis over its 10-year life to a salvage value of $400,000. The actual market value of the lathe at that time also will be $400,000. The discount rate is 10%, and the corporate tax rate is 20%, what is the NPV of buying the new lathe? (A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131865043

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