The management of Iroquois National Bank is considering an investment in automatic teller machines. The machines would cost $170,200 and have a useful life of seven years. The bank’s controller has estimated that the automatic teller machines will save the bank $37,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value.
Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)
Compute the net present value of the proposed investment assuming an after-tax hurdle rate of:
(a) 10 percent,
(b) 12 percent, and
(c) 14 percent.
(Negative amounts should be indicated by a minus sign. Round your final answers to the nearest dollar amount.)