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4. Jefferson Products, Inc., is considering purchasing a new automatic press brake, which costs $300,000 including installation and shipping. The machine is expected to generate
4. Jefferson Products, Inc., is considering purchasing a new automatic press brake, which costs $300,000 including installation and shipping. The machine is expected to generate net cash inflows of $80,000 per year for 10 years. At the end of 10 years, the book value of the machine will be $0 and it is anticipated that the machine will be sold for $100,000. If the press brake project in undertaken, Jefferson will have to increase its net working capital by $75,000. When the project is terminated in 10 years, there will no longer be a need for this incremental working capital and it can be liquidated and made available to Jefferson for other uses. Jefferson requires a 12 percent annual return on this type of project and its marginal tax rate is 40 percent. a. Calculate the press brake
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