Question

Cromwell Mediwaste is considering purchasing a $270,000 scrubber for the smokestack on its incinerator in order to reduce the number of environmental fines levied against them. Cromwell believes the scrubber would become ineffective and worthless after three years. The equipment will be depreciated using the three-year MACRS schedule. The 3-year project will reduce costs by $125,000 per year and net working capital will be reduced by $10,000. Cromwell is in the 20 percent tax bracket and requires a 20 percent return on projects. What is the project NPV? (Round to the neatest whole number)

Answer 1