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A corporation is considering purchasing a machine that costs $500,000. The machine has a lifespan of 6 years with no salvage value. The machine is
A corporation is considering purchasing a machine that costs $500,000. The machine has a lifespan of 6 years with no salvage value. The machine is expected to generate annual revenues of $120,000 with annual operating costs (excluding depreciation) of $20,000. The company’s tax rate is 30%. The discount rates and cumulative factors for 6 years are as follows:
Discount Rate | Cumulative Factor |
10% | 4.355 |
12% | 4.111 |
14% | 3.889 |
16% |
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