A carwash dryer is purchased for $150,000 and is expected to last ten years but have no salvage value. Although it takes $15,000/year to maintain, it will generate $50,000/year revenue.
Joe DePlumma, the owner, can make an 18% rate of return on his other business ventures and so that is his MARR.
If Joe's combined income tax rate is 40% and he uses straight line depreciation over ten years, state here the net present worth (NPW), to the closest dollar, of the dryer to Joe when the taxes are considered.
Based on that NPW, state here whether or not Joe should invest in this dryer?
Answers:
NPW: __________
Should he invest in the dryer? __________