USE EXCEL You are considering installing a new machine for your facility. The machine costs...
90.2K
Verified Solution
Link Copied!
Question
Accounting
USE EXCEL
You are considering installing a new machine for your facility. The machine costs $220,000 and will generate additional revenues of $85,000 per year. It will also save $65,000 per year in labor and material costs. To parchase this machine, you will be getting a loan of $120,000 which is repayable in three equal annual installments with a 9% percent interest rate (i=9%). The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years, after which it will be sold for $20,000. Note that the marginal tax rate is 40%. 1. Develop a cash flow for the problem (Find the year by year after tax cash flow for the project like we did in class) 2. Compute the IRR for this investment 3. At MARR = 18%, is this project acceptable/justifiable?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
