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Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: You want to purchase a new milling machine for $100,000 to complete an important
Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: You want to purchase a new milling machine for $100,000 to complete an important project that has a three-year life. You will buy the milling machine using debt financing; 50% of the machine's cost will be borrowed. The debt will be paid off in uniform annual payments over the life of the project. The debt portion of this investment is borrowed at 10% annual interest rate. The purchase is expected to generate savings of $35,000 increasing by 10% each year. The purchase of the milling machine will lead to maintaining costs of $5,000 per year in each of the next three years. The profits will be taxed at a rate of 30%. The milling machine falls into the specific CCA Class with rate = 30% for tax purposes (50% convention applies). The constant-dollar market value of the machine tools is expected to be $25,000. The general inflation rate is estimated as 8% per year. Inflation-free interest rate, i' is given as 5%. Using the information above, find the equivalent net present worth in constant dollars. Assume everything is given in n=0, CONSTANT dollars unless otherwise stated: You want to purchase a new milling machine for $100,000 to complete an important project that has a three-year life. You will buy the milling machine using debt financing; 50% of the machine's cost will be borrowed. The debt will be paid off in uniform annual payments over the life of the project. The debt portion of this investment is borrowed at 10% annual interest rate. The purchase is expected to generate savings of $35,000 increasing by 10% each year. The purchase of the milling machine will lead to maintaining costs of $5,000 per year in each of the next three years. The profits will be taxed at a rate of 30%. The milling machine falls into the specific CCA Class with rate = 30% for tax purposes (50% convention applies). The constant-dollar market value of the machine tools is expected to be $25,000. The general inflation rate is estimated as 8% per year. Inflation-free interest rate, i' is given as 5%. Using the information above, find the equivalent net present worth in constant dollars
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