What is the total initial cash outflow

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Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $57,612.00 seven years ago. The old equipment currently has no market value. The new equipment cost $77,929.00 . The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project the equipment is expected to have a salvage value of $27,614.00 . The new equipment is expected to save the firm $25,146.00 annually by increasing efficiency and cost savings. The corporation has tax rate of 27.46% and a required return on capital of 12.55% .

Problem a) What is the total initial cash outflow? (show as negative number )

Problem b) What are the estimated annual operating cash flows?

Problem c) What is the terminal cash flow?

Problem d) What is the NPV for this project?

Reference no: EM132795335

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