What is the npv of project of the new machine

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Although the Rave Company's milling machine is old, it is still in relatively good working order and would last for another 5 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $40,000 delivered and installed, would also last for 5 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $15,000 per year. It would have zero salvage value at the end of its life. The firm's WACC is 10%, and its marginal tax rate is 25%. What is the NPV of project of the new machine?

Reference no: EM132439142

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