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1 .whats the intial outlay 2. OCF of year 1 3. Ocf of year 2 4. After Tax salvage Value The president of Kelly, Inc.

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1 .whats the intial outlay 2. OCF of year 1 3. Ocf of year 2 4. After Tax salvage Value The president of Kelly, Inc. has asked you to evaluate the proposed acquisition of a new machine. The machine's base price is $50,000 plus an additional $10,000 in installation costs, and it falls in the MACRS 3-year class life. Purchase of the machine would lead to an increase of $3,000 in working capital. The machine would increase the firm's before-tax operating revenues by $55,000 per year but also increase operating costs by $20,000 per year. The machine is expected to be used for three years and then sold for $8,000. The firm's marginal tax rate is 40%, and the project's cost of capital is 14%

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