18. The Hobbit Company Ltd is considering replacing the equipment it uses to produce tents. The equipment would cost $1.4 million and lower manufacturing costs by an estimated $215,000 a year. The equipment will be depreciated using straight-line depreciation to a book value of zero. The life of the equipment is 8 years. The required rate of return is 13% and the tax rate is 34%. What is the net profit after tax from this proposed project?
Select one:
A. $13,600
B. $26,400 Correct
C. $32,400
D. $40,000
E. $53,600
How to calculate the right answer?
