Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Build Corporation wants to purchase a new machine for $294,000. Management predicts that the machine can produce sales of $203,000 each year for the next
Build Corporation wants to purchase a new machine for $294,000. Management predicts that the machine can produce sales of $203,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor and factory overhead (excluding depreciation) totaling $68,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets Bulld's combined income tax rate is 20% Management requires a minimum after-tax rate of return of 10% on all Investments What is the net present value (NPV) of the Investment, rounded to the nearest whole dollar? (The PV annuity factor for 5 years, 10% IS 3.791) Assume that the cash Intlows occur at year-end. Multiple Choice ($366,554) $160,010, $205,502 $250.994 None of these
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started