Cookies R Us Incorporated is evaluating a new cookie cutting machine that will cost $500,000. The machine can be depreciated on a straight-line basis to zero over 10 years. It will provide the company with annual before-tax savings of $135,000. The marginal corporate tax rate is 40% and the required rate of return is 15%. What is the net present value of this cost-cutting asset? Multiple Choice $128,611.12 $157,458.69 -$193,855.11 $6,895.63 $277,909.14
Cookies R Us Incorporated is evaluating a new cookie cutting machine that will cost $500,000. The machine can be depreciated on a straight-line basis to zero over 10 years. It will provide the company with annual before-tax savings of $135,000. The marginal corporate tax rate is 40% and the required rate of return is 15%. What is the net present value of this cost-cutting asset? Multiple Choice $128,611.12 $157,458.69 -$193,855.11 $6,895.63 $277,909.14
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
Related questions
Question
Cookies R Us Incorporated is evaluating a new cookie cutting machine that will cost $500,000. The machine can be
Multiple Choice
-
$128,611.12
-
$157,458.69
-
-$193,855.11
-
$6,895.63
-
$277,909.14
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