Daily Enterprises is purchasing a $4.1 million machine. It will cost $66,000 to transport and install the machine. The machine has a depreciable life of six years and will have no salvage value. The machine will generate incremental revenues of $2.2 million per year. In addition, there will be a incremental cost of sales of $0.9 million per year, as well as $0.5 million per year in operating expenses. If Daily's marginal tax rate is 30%, what are the incremental earnings (net income) associated with the new machine?
Daily Enterprises is purchasing a $4.1 million machine. It will cost $66,000 to transport and install the machine. The machine has a depreciable life of six years and will have no salvage value. The machine will generate incremental revenues of $2.2 million per year. In addition, there will be a incremental cost of sales of $0.9 million per year, as well as $0.5 million per year in operating expenses. If Daily's marginal tax rate is 30%, what are the incremental earnings (net income) associated with the new machine?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Daily Enterprises is purchasing a $4.1 million machine. It will cost $66,000 to
transport and install the machine. The machine has a depreciable life of six years
and will have no salvage value. The machine will generate incremental revenues of
$2.2 million per year. In addition, there will be a incremental cost of sales of $0.9
million per year, as well as $0.5 million per year in operating expenses. If Daily's
marginal tax rate is 30%, what are the incremental earnings (net income) associated
with the new machine?
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