Cheap-O Foods is considering replacing all 10 of its old cash registers with new ones. The old registers are fully depreciated and have no disposal value. The new registers cost $ 899,640 (in total). Because the new registers are more efficient than the old registers, Cheap-O will have annual incremental cash savings from using the new registers in the amount of $ 192,000 per year. The registers have a 7-year useful life and no terminal disposal value and are depreciated using the straight-line method. Cheap-O requires an 8% real rate of return.
Assume that the company’s tax rate is 30%. Calculate the NPV of the project assuming no inflation.