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Capital Budgeting (20 points) Samson is considering an investment of $500,000 in a machine with a five-year life. The machine will be depreciated straight-line to
Capital Budgeting (20 points) Samson is considering an investment of $500,000 in a machine with a five-year life. The machine will be depreciated straight-line to zero over five years. The machine will cost $100,000 to run annually but will save $400,000 per year in operating expenses by streamlining manufacturing. Both revenues and expenses will be constant over the five-year life of the machine. At the end of the five years, Samson will sell the machine for $30,000. The project requires a one-time investment in working capital of $20,000 at the beginning of the project. The working capital can be reclaimed at the end of the project life. All cash flows are taxed at 35%. Provide estimates of the project cash flows in years 0 to 5
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