Ringo Manufacturing is considering the purchase of a new machine for $55,000. The machine is...
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Ringo Manufacturing is considering the purchase of a new machine for $55,000. The machine is expected to save the firm $14,500 (before tax) per year in operating costs over a 5 year period, and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively, the firm can lease the machine for $3,400 per year for 5 years, with the first payment due in 1 year. The firm's tax rate is 20%, and its before tax cost of debt is 10%. The Net Present Value of purchasing the new machine is:
Answer 99 (with margin: 5)
ENTER ANSWER TO THE DOLLAR. DO NOT ENTER COMMAS OR "$" SIGNS. ENSURE YOU INCLUDE A "-" IF THE ANSWER IS NEGATIVE
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