A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor

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A new electronic process monitor costs $990,000. This cost could
be depreciated at 30% per year (Class 10). The monitor would
actually be worth $100,000 in five years. The new monitor would
save $460,000 per year before taxes and operating costs. The new
monitor requires us to increase net working capital by $47,200 when
we buy it. Assume a tax rate of 40%.
a. If we require a 15% return, what is the
NPV of the purchase? (Do not round intermediate
calculations. Round the final answer to 2 decimal places. Omit $
sign in your response.)
NPV
$
b. Suppose the monitor was assigned a 25%
CCA rate. Calculate the new NPV. (Do not round
intermediate calculations. Round the final answer to 2 decimal
places. Omit $ sign in your response.)
NPV
$
c. Will the NPV at 25% CCA rate be larger
or smaller?
multiple choice
Smaller
Larger