You have been asked by the president of your company to elaluate the proposed acquisition of a new special-purpose machine The machine's total price including installation and delivery is $70,000 The machine falls into the our-year class using straight line depreciation method, and it will be sold after four years for 50. The use of this new machine will bring revenue of $35,000 annually for 4 years, and will have annual maintenance expense of $5,000 The Birm's marginal tax rate is 40 percent and the required rate of return is 15% (Please show your work) a What is the intal investment b What is the Cash Flow at year 1 c What is the Cash Flow at year 4 d What is NPV ? keep your number as a whole number example of answer format $1000) 2(keep your number as a whole number example of answer format $1000) 7(keep your number as a whole number example of answer format $1000) (keep your number to two decimats example of answer format $1000.00 or if its negative, then-$1000.00)

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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You have been asked by the president of your company to elaluate the proposed acquisition of a new special-purpose machine The machine's total price including installation and delivery is 570,000. The machine falls into the
four-year class using straight line depreciation method, and it will be sold after four years for 50. The use of this new machine will bring revenue of $35,000 annually for 4 years, and will have annual maintenance expense of
$5,000 The firm's marginal tax rate is 40 percent and the required rate of return is 15% (Please show your work)
a What is the inital investment
b. What is the Cash Flow at year 1
c. What is the Cash Flow at your 4
d What is NPV
? keep your number as a whole number example of answer format $1000)
2(keep your number as a whole number example of answer format $1000)
7(keep your number as a whole number example of answer format $1000)
?(keep your number to two decimats example of answer format $1000.00 or if its negative, then-S1000.001
Transcribed Image Text:You have been asked by the president of your company to elaluate the proposed acquisition of a new special-purpose machine The machine's total price including installation and delivery is 570,000. The machine falls into the four-year class using straight line depreciation method, and it will be sold after four years for 50. The use of this new machine will bring revenue of $35,000 annually for 4 years, and will have annual maintenance expense of $5,000 The firm's marginal tax rate is 40 percent and the required rate of return is 15% (Please show your work) a What is the inital investment b. What is the Cash Flow at year 1 c. What is the Cash Flow at your 4 d What is NPV ? keep your number as a whole number example of answer format $1000) 2(keep your number as a whole number example of answer format $1000) 7(keep your number as a whole number example of answer format $1000) ?(keep your number to two decimats example of answer format $1000.00 or if its negative, then-S1000.001
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