Future Semiconductors Is Evaluating a New Etching Tool

question 62

Multiple Choice

Future Semiconductors is evaluating a new etching tool.The equipment costs $1.0m and will generate after-tax cash inflows of $0.4m per year for six years.Assume the firm has a 15% cost of capital.What's the NPV of the investment?

• A) $0.51m
• B) $0.45m
• C) $1.51m
• D) $1.69m

---

Definitions:

Offshoring

The relocation of business processes by a company or subsidiary to another country. Offshoring is different than outsourcing because the company retains control of the offshored processes.