The cost of the new machine is $127,000.Installation will cost $20,000.$4,000 in net working capital will be needed at the time of installation.The project will increase revenues by $85,000 per year, but operating costs will increase by 35% of the revenue increase.Simplified straight line depreciation is used.Class life is 5 years, and the firm is planning to keep the project for 5 years.Salvage value at the end of year 5 will be $50,000.14% cost of capital; 34% marginal tax rate. /////// The depreciation is 29400. How do I get this result? Could you please show me how to get depreciation by NOT using excel but calculation?

Part 2: ExplanationStep 1: Calculate the Initial InvestmentThe initial investment includes the cost…

Answered: The cost of the new machine is…

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

Problem 1PS

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A company wants to purchase a piece of equipment that costs $18,000. In 8 years, that same piece of equipment is expected to have a salvage value of $5,000. The estimated annual maintenece cost is $1,000 in the first year, but is expected to increase by $300 each year thereafter. What is the present worth of the project, using a 10% interest rate.
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