Problem:
Who Dat Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine will produce 2,250 soufflés per year, with each costing $2.70 to make and priced at $6.00. Assume that the discount rate is 15 percent and the tax rate is 34 percent.
Required:
Question: What is the NPV of the project?
Note: Provide support for rationale.