30. Financial Break-Even The Cornchopper Company is considering the purchase of a new harvester. Cornchopper has hired you to determine the break-even purchase price in terms of present value of the...

Financial Break Even - How do I go about answering this question

Extracted text: 30. Financial Break-Even The Cornchopper Company is considering the purchase of a new harvester. Cornchopper has hired you to determine the break-even purchase price in terms of present value of the harvester. This break- even purchase price is the price at which the project's NPV is zero. Base your analysis on the following facts: • The new harvester is not expected to affect revenue, but pretax operating expenses will be reduced by $13,000 per year for 10 years. • The old harvester is now 5 years old, with 10 years of its scheduled life remaining. It was originally purchased for $65,000 and has been depreciated by the straight-line method. • The old harvester can be sold for $21,000 today. • The new harvester will be depreciated by the straight-line method over its 10-year life. • The corporate tax rate is 22 percent. • The firm's required rate of return is 15 percent. • The initial investment, the proceeds from selling the old harvester, and any resulting tax effects occur immediately. • All other cash flows occur at year-end. • The market value of each harvester at the end of its economic life is zero.