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Chartreuse Co. has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of six years.
Chartreuse Co. has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of six years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $714,000. The sales price per pair of shoes is $61, while the variable cost is $15. Fixed costs of $169,000 per year are attributed to the machine. The corporate tax rate is 24 percent and the appropriate discount rate is 9 percent.
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