Titan State Bank offers to pay you 6% interest, compounded quarterly. The 6% interest rate is known as the: ANSWER Unselected re
1 answer:
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Answer:
Yes it should as the net present value at the firm WACC is positive $ 4,156.54
Explanation:
we are given with the after-tax cost for the machine and after-tax cost of the labor cost savings the new machine will provide
So we should check if the present value of the savings is greater or equal than the machine cost:
C $ 8,000
time 10 years
rate=WACC= 0.1
PV $49,156.5368
Net present value:
inflow - cost
49,156.54 - 45,000 = 4,156.54