Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase...

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Bottoms Up Diaper Service is considering the purchase of a newindustrial washer. It can purchase the washer for $9,600 and sellits old washer for $3,400. The new washer will last for 6 years andsave $2,900 a year in expenses. The opportunity cost of capital is22%, and the firm’s tax rate is 40%.
a. If the firm uses straight-line depreciationto an assumed salvage value of zero over a 6-year life, what is theannual operating cash flow of the project in years 0 to 6? The newwasher will in fact have zero salvage value after 6 years, and theold washer is fully depreciated. (Negative amount should beindicated by a minus sign.)
b. What is project NPV? (Negativeamount should be indicated by a minus sign. Do not roundintermediate calculations. Round your answer to 2 decimalplaces.)

c. What is NPV if the firm uses MACRSdepreciation with a 5-year tax life? Use the MACRS depreciationschedule. (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)

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Bottoms Up Diaper Service is considering the purchase of a newindustrial washer. It can purchase the washer for $9,600 and sellits old washer for $3,400. The new washer will last for 6 years andsave $2,900 a year in expenses. The opportunity cost of capital is22%, and the firm’s tax rate is 40%.a. If the firm uses straight-line depreciationto an assumed salvage value of zero over a 6-year life, what is theannual operating cash flow of the project in years 0 to 6? The newwasher will in fact have zero salvage value after 6 years, and theold washer is fully depreciated. (Negative amount should beindicated by a minus sign.)b. What is project NPV? (Negativeamount should be indicated by a minus sign. Do not roundintermediate calculations. Round your answer to 2 decimalplaces.) c. What is NPV if the firm uses MACRSdepreciation with a 5-year tax life? Use the MACRS depreciationschedule. (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)