Question: A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associated estimates are summarized below:
Annual receipts $75,000
Annual expenses $45,000
Useful life 8 years
Terminal book value (EOY 8) $20,000
Terminal market value $0
Straight-line depreciation will be used, and the effective income tax rate is 20%. The after-tax MARR is 15% per year. Determine whether this investment is an attractive option for the company.