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Company SZ is considering the purchase of a new machine today. The machine costs $8000...

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Finance

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Company SZ is considering the purchase of a new machine today. The machine costs $8000 plus 52000 for shipping and installation and falls under the 5-year MACRS set clan. If the company takes this project of asset expansion, revenues will increase by $1000 and operating costs will increase by $500 for each of the next 6 years compared to the case of no expansion. When the project ends in the sixth year, the machine will be sold for S1000. If the project is taken, net working capital will use by 5500 at the time of purchase and will be reversed at the time of sale. The corporate income tax rate is 30% and the tax rate on capital gain is 20% Year 1 2 3 4 MACRS Schedule 3-Year Class 3. Year Class 33.33% 20.00% 32.00 14.81% 19.2008 741% 11.52 11529 5.76% 7.Year Class 14.1946 24.49% 17.49% 12.49% 8.9396 8 929 8.935 4.4696 S 6 7 8 Compute the incremental cashflow associated with the asset expansion project in Your 6 relative to taking no action

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