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Assume we bought a machine 5 years ago for $100,000. It was depreciated straight-line to...

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Finance

Assume we bought a machine 5 years ago for $100,000. It was depreciated straight-line to zero over 10 years. It is currently unused.

If we sold the machine "as is", it would sell for $25,000 today.

Our project will last 3 years with revenues of $50,000, $60,000 and $65,000. Expenses are projected to be 40% of revenue.

Taxes are 40% and the required rate-of-return is 10%. At the end of the project, we expect to be able to scrap the machine for $10,000 at the end of the project.1

1.What is annual depreciation

2.What is NPV (dollars and cents)?

3..What is Profitability Index? (2 decimals)

4.Compute Average Accounting Return (percentage format -- 2 decimals)

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