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# Answer to Question #105467 in Finance for Ray

Question #105467
1-Company XYZ plans to acquire a new automated welding system to replace the existing manual system. This new system will initially cost $600,000 and will be amortized at an ACC rate of 30%. The expected life of the system is 4 years, and the company estimates it will be worth$ 100,000 at the end of this period. Since the new automated system will be more efficient than the old one, the company can expect to achieve a cost savings of \$ 180,000 per year before tax during the period. If the ERR is 15% and the tax rate is 44%, what is the net present value of the new system?
1
2020-03-24T09:35:29-0400

"NPV = -600,000 + \\frac{180,000\u00d70.56 + 0.3\u00d7600,000}{1.15} + \\frac{180,000\u00d70.56 + 0.3\u00d7420,000}{1.15^2} + \\frac{180,000\u00d70.56 + 0.3\u00d7294,000}{1.15^3} + \\frac{180,000\u00d70.56 + 0.3\u00d7205,800 + 100,000}{1.15^4} =90,045.96."

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