XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $47,900.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-tax cash flow of $13,800.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2 years. With the system, costs are expected to be $75,300.00 in 1 year and $65,500.00 in 2 years. If the tax rate is 45.90% and the cost of capital is 8.70%, what is the net present value of the new interception system project? Selected Answer: $15113.80 (plus or minus $50)
$12692.40 (plus or minus $50) $15915.31 (plus or minus $50) $15113.80 (plus or minus $50) $11285.92 (plus or minus $50) None of the above is within $50 of the correct answer
