Bricks Company purchased a new machine with acquisition cost of $3.5 million and installation cost of $
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Question:
Bricks Company purchased a new machine with acquisition cost of $3.5 million and installation cost of $ 1 million. As a result of acquiring the machine, the expected incremental cash flows before taxes are as follows:
Year 1 $1,875,000
Year 2 $ 2,500,000
Year 3 $ 3,125,000
Year 4 $ 3,125,000
Year 5 $ 3,125,000
The expected incremental cash flows are subject to a tax rate of 20%. The company's cost of capital is 10%
Compute for the following:
- Payback period?
- Net present value (NPV)?
- Internal rate of return (IRR)?
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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