3. John needs a new production machine for operations.The machine cost is $250,000Estimated life is 7 yearsAdditional revenue is expected to be $30,000, net of tax, per year (based upon 1,000 additional widgets produced per run)Additional efficiency labor savings per time study is $17,600 per yearAdditional tax savings from depreciation based upon a tax rate of 35% calculated on a straight line basis.

Payback -

NPV @ 8% (hurdle rate)-

IRR -