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A university student painter is considering the purchase of a new air compressor and paint...

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Finance

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A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. (Both items belong to Class 9 and have a 25% CCA rate.) These two new items cost $12,200 and have a useful life of four years, at which time they can be sold for $1,800. The old paint sprayer can be sold now for $520 and could be scrapped for $270 in four years. The entrepreneurial student believes that operating revenues will increase annually by $8,200. The tax rate is 22% and the required rate of return is 15% What is the NPV of the new equipment? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ Should the purchase be made? Yes O NO

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