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A company making plastic car parts buys new molding machines to expand its production capacity. The machines cost $ 3 million, with additional charges for
A company making plastic car parts buys new molding machines to expand its production capacity. The machines cost $ million, with additional charges for delivery and installation totaling $ Employees will have to be trained to use the new machines at the cost of $ With the increased production, accounts payable will increase by $ inventory will increase by $ and accounts receivable will increase by $ at the outset. These changes in the working capital will be recaptured at the end of the projects life of years. The depreciable life of the machines is years, and the company uses straightline depreciation. The increased production will increase the sales revenue by $ million and the costs including depreciation by $ per year in each of the next years. The company expects to sell the machines after five years for $ The companys tax rate is and its cost of capital the projects req
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