Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 13% cost of capital is appropriate for the project. alculate the project's NPV. Round your answer to the nearest dollar. $ Calculate the project's IRR. Round your answer to two decimal places.      % Calculate the project's MIRR. Round your answer to two decimal places.      % Calculate the project's payback. Round your answer to two decimal places.

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
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Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 40%, and a 13% cost of capital is appropriate for the project.

alculate the project's NPV. Round your answer to the nearest dollar.
$
Calculate the project's IRR. Round your answer to two decimal places.
     %
Calculate the project's MIRR. Round your answer to two decimal places.
     %
Calculate the project's payback. Round your answer to two decimal places.

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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