What is the project npv for new excavator

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Problem 1: A new excavator worth $10,000 can replace an existing excavator and provide annual savings of $3000 for five years. The old excavator can be sold for $500. The new, as well as old excavator, are eligible for tax depreciation at 20% per annum of the current value over the next 5 years. Assuming a cost of capital at 8% and tax rate of 30%. What is the project NPV?

Reference no: EM132950181

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