Tripp Industries is considering buying a new recycling system. The new recycling system would be purchased today for $7,760.00. It would be depreciatedstraight-line to $1,060.00 over 2 years. In 2 years, the recycling system would be sold and the after-tax cash flow from capital spending in year 2 would be$1,290.00. The recycling system is expected to reduce costs by $2,810.00 in year 1 and by $8,610.00 in year 2. If the tax rate is 59.00 % and the cost of capital is7.16%, what is the net present value of the new recycling system project?$426.49 (plus or minus $10)$331.08 (plus or minus $10)$1,078.26 (plus or minus $10)-$2,115.95 (plus or minus $10)None of the above is within $10 of the correct answer

Part 2: Explanation:Step 1: Calculate the annual depreciation expense.The initial cost of the…

Answered: Tripp Industries is considering buying…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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