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Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company. You are considering adding a new machine to your
Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machine's base price is $11,100.00, and it would cost another $2,930.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after three years for $2,150.00. The machine would require an increase in net working capital (inventory) of $760.00. The new machine would not change revenues, but it is expected to save the firm $30,255.00 per year in before-tax operating costs, mainly labor. XYZ's marginal tax rate is 40.00%. If the project's cost of capital is 15.60%, what is the NPV of the project? Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. O $31,867.45 O $20,647.53 O $14,030.00 0 $25,175.28 O $11,100.00
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