What is the npv of the project

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Reference no: EM131615705

Questionable, Inc. is considering the purchase of a $55,000 new machine that will increase revenues by $11,500 annually. The new machine will also enable the firm to initially reduce the need for inventory by $10,000 when the machine is installed. Questionable's marginal tax rate is 40% and the cost of capital is 5.5%. Questionable will depreciate the machine to $5000 using the 5 year straight line method and expects to be able to sell the machine for $12,000 at the end of year 5. What is the NPV of the project and should we accept or reject it? Justify your answer.

Reference no: EM131615705

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