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Basket Wonders (BW) is considering the purchase of a new basket weaving machine. The machine will cost GHS 50,000 plus GHS 20,000 for shipping and

Basket Wonders (BW) is considering the purchase of a new basket weaving machine. The machine will cost GHS 50,000 plus GHS 20,000 for shipping and installation. Yearly depreciation rates are 33.33%, 44.45%, 14.81% and 7.41% respectively. NWC will rise by GHS5,000. Mgt. forecasts that revenues will be GHS 110,000 for each of the next 4 years and will then be sold (scrapped) for GHS 10,000 at the end of the fourth year, when the project ends. Operating costs will also be GHS 70,000 for each of the next four years. BW is in the 40% tax bracket.

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