Turntec Is Considering Replacing an Automatic Shuttle Machine That Has

Multiple Choice

Turntec is considering replacing an automatic shuttle machine that has a book value of $2,000 and a $0 market value with a more efficient machine that will cost $24,000. The annual net cash flows from the new equipment are expected to be $6,000 for the next 6 years. What is the net present value of this project? Assume the firm's cost of capital is 12% and its marginal tax rate is 40%.

A) $666
B) $1,466
C) $1,866
D) -$134