please show the steps A company is considering the acquisition of a...
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A company is considering the acquisition of a new machine for $140,000. Because of a rapid change in technology, the need for this machine is expected to last only two years. At this time, the machine will have a salvage value of $60,000. Year 1 Year 2 Yearly maintenance costs $10,400 $10,816 Yearly labor costs $ 5,200 $ 5,408 Annual revenues $67,600 $70,304 The company has only $50,000 available for this investment and must borrow the additional $90,000 at a market interest rate of 10% per year. The loan will be paid in two equal payments. The income tax rate is 40%, the after-tax real MARR is 7.70%, and the expected inflation rate is 4% per year over the next two years. The CCA rate for the machine is 30%. All dollar figures are in constant dollars. Please determine if this is a good investment for the company
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