Gila Inc. is considering purchasing a piece of equipment worth $1,800,000. The machine would have a net $0 of pre-tax cash flows: the expense required to maintain the machine would offset any revenues generated. The machine would be depreciated over the course of 30 years, after which time the machine would be scrapped.
Assuming that the company takes a full year of depreciation the first year, the tax rate is 25%, and the discount rate is 7%, what is the Net Present Value of the proposed machine?

Question

Gila Inc. is considering purchasing a piece of equipment worth $1,800,000. The machine would have a net $0 of pre-tax cash flows: the expense required to maintain the machine would offset any revenues generated. The machine would be depreciated over the course of 30 years, after which time the machine would be scrapped. 
Assuming that the company takes a full year of depreciation the first year, the tax rate is 25%, and the discount rate is 7%, what is the Net Present Value of the proposed machine?

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The Answer of Gila Inc. is considering purchasing a piece of equipment worth $1,800,000. The machine would have a net $0 of pre-tax cash flows: the expense required to maintain the machine would offset any revenues generated. The machine would be depreciated over the course of 30 years, after which time the machine would be scrapped. 
Assuming that the company takes a full year of depreciation the first year, the tax rate is 25%, and the discount rate is 7%, what is the Net Present Value of the proposed machine?

Gila Inc Is Considering Purchasing a Piece of Equipment Worth $1,800,000