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Crane Sporting Goods is planning to buy a new equipment to replace the existing old...

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Accounting

Crane Sporting Goods is planning to buy a new equipment to replace the existing old equipment. The new equipment will not affect the firm's
unlevered net income or net working capital. The old equipment was purchased 3 years ago at a price of $1.2 million and follows a five-year straight-
line depreciation method. The old equipment has a market value of $0.5 million now and $0 in the future. The new equipment will cost $1.4 million
and follows a five-year straight-line depreciation method. By the end of year five, the CFO expects to sell the new equipment for a price of $0.6
million. What is the NPV of the equipment replacement plan for the next five years at a discount rate of 12%? The marginal tax rate for the firm is
25%.
A.-0.046 million
B.-0.054 million
C.0.035 million
D.0.045 million
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