question archive Hydro One is evaluating buying two different transforms
Hydro One is evaluating buying two different transforms
Subject:FinancePrice: Bought3
Hydro One is evaluating buying two different transforms.
Ø Transformer #1: costs $370,000 has a 3 year life, has pre-tax operating cost of $80,000 per year.
Ø Transformer #2: costs $475,000 has a 5 year life, has pre-tax operating cost of $30,000 per year.
Ø Both transformers are Class 8 (CCA rate of 20% per year) and both have a savage value of $40,000.
The firm's tax rate is 35% and discount rate is 10%
What is the NPV for Transformer #1?
Select one:
a. -$411,587.68
b. None of these.
c. -$315,478.58
d. -$390,110.32
e. -$295,478.58
