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What is the project NPV

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Question - Stanton Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually and increase earnings before depreciation and taxes by $6,000 annually. Stanton will use the MACRS method to depreciate the machine, and it expects to sell the machine at the end of its 5-year operating life for $10,000 before taxes. Stanton's marginal tax rate is 40%, and it uses a 9% required rate of return to evaluate projects of this type. If the machine's cost is $40,000, what s the project's NPV?

a. $1,014

b. $2,292

c. $7,550

d. $817

e. $5,040

Reference no: EM132779498

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