A corporation is considering purchasing a machine that costs $120,000 andwill save $X per year after taxes. The cost of operating the machine, including maintenance and depreciation, is $20,000 per year after taxes. The machine will be needed for four years after which it will have a zero salvage value. If the firm wants a 14% rate of return after taxes, what is the minimum after-tax annual savings that must be generated to realize a 14% rate of return after taxes?(a) $50,000(b)$61,184(c) $91,974(d) $101,974

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Chapter11: Capital Budgeting Decisions
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A corporation is considering purchasing a machine that costs $120,000 and
will save $X per year after taxes. The cost of operating the machine, including maintenance and depreciation, is $20,000 per year after taxes. The machine will be needed for four years after which it will have a zero salvage value. If the firm wants a 14% rate of return after taxes, what is the minimum after-tax annual savings that must be generated to realize a 14% rate of return after taxes?
(a) $50,000
(b)$61,184
(c) $91,974
(d) $101,974

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