Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $7,800 and sell its old washer for $1,600.
The new washer will last for 6 years and save $2,300 a year in expenses.
The opportunity cost of capital is 17%, and the firm's tax rate is 40%.
What is NPV if the firm uses MACRS depreciation with a 5-year tax life?
Use the MACRS depreciation schedule.