Question
Dezful Chemical Corporation is considering the purchase of a chemical analysis machine with the following information: Purchase Price of $150,000 with shipping & installation of
Dezful Chemical Corporation is considering the purchase of a chemical analysis machine with the following information:
Purchase Price of $150,000 with shipping & installation of $5,000
Training cost of $4,000 and working capital requirement of $6,000
Annual revenue increases by $60,000 and operating cost increases by $10,000
Life: 10 years
Depreciation: Straight-line to zero salvage value
Market Value of Machine in 10 years: $12,000
Cost of capital of 12% with Tax Rate: 25%
Calculate the followings:
- Initial Outlay (Net Investment).
- Net change in net annual cash flow (year 1 10).
- Terminal Cash flow.
- Should this machine be purchased?
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F For Quantitative Finance
Authors: Johan Astborg
1st Edition
1782164626, 978-1782164623
