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A.) 650 B.) -1,000 C.) -1,200 D.) 1,000 Your company is considering a machine that will cost $1,000 today (i.e., at t=0 ) and which
A.) 650
B.) -1,000
C.) -1,200
D.) 1,000
Your company is considering a machine that will cost $1,000 today (i.e., at t=0 ) and which can be sold after 3 years for $100. To operate the machine, $200 must be invested today in inventories; these funds will be recovered when the machine is retired at the end of Year 3 . The machine will produce sales revenues of $1,500 /year for 3 years; variable operating costs (excluding depreciation) will be 50 percent of sales. Operating cash inflows will begin 1 year from today (i.e., at t=1 ). The machine will have depreciation expenses of $500, $300, and $200 in Years 1, 2, and 3, respectively. The company has a 40% tax rate. Inflation is zero. What is the Net CF todayStep by Step Solution
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