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2. On January 1,O Neill Company purchased a new machine for $300,000. It will depreciate on a straight-line basis over five years with no salvage

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2. On January 1,O Neill Company purchased a new machine for $300,000. It will depreciate on a straight-line basis over five years with no salvage value at the end of that time. For book and tax purposes, depreciation will be $60,000 per year. It will produce annual cash flows from operations, before income taxes, of $90,000 each year. The tax rate is 40% and the company uses a 10% cost of capital. The present value of $1 at 10% for five periods is .621. The present value of an ordinary annuity of $1 at 10% for five periods is 3.791. What is the net present value of this machine? A. $41,140 negative B. \$4,302 negative C. \$4,302 positive D. $25,579 positive E. $41,140 positive

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