The XYZ Corporation is planning to purchase an extruder. Thepurchase price of the extruder is $350,000. The company plans tomake a down payment of 25% of the first cost of the extruder and tomake a 7-year, 10%, yearly payment loan for the rest of the firstcost of the extruder. XYZ believes that the extrudercan be sold for $75,000 at the end of its 15-year service life.
The new extruder will increase the company's annual income by$90,000. Maintenance and operating costs are expected to be$4,000 during the first year and to increase by $1,200 eachyear. XYZ uses a before-tax MARR of 12% for its preliminaryeconomic studies.
What is the net present worth (NPW) of this investment toXYZ?