Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Builtrite is considering purchasing a new machine that would cost $75,000 and the machine would be depreciated (straight line) down to $0 over its five

image text in transcribed

Builtrite is considering purchasing a new machine that would cost $75,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The current machine being used was purchased 2years ago at a cost of $50,000 and it is being depreciated down to zero over its 5 year life. The current machine's salvage value now is $35,000. Also, a higher level of inventory would be needed in the amount of $3000 for the new machine. The new machine would increase EBDT by $56,000 annually. Builtrite's marginal tax rate is 34%. What is the TCF associated with the purchase of this machine? $9,900 $17,300 $14,300 $12,900

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Finance

Authors: Kirt C. Butler

4th Edition

1405181184, 978-1405181181

More Books

Students also viewed these Finance questions