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Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $ 1 , 5 5

Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $1,550,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. The machine will produce 24,000 keyboards each year. The price of each keyboard will be $56 in the first year and will increase by 5 percent per year. The production cost per keyboard will be $23 in the first year and will increase by 6 percent per year. The project will have an annual fixed cost of $270,000 and require an immediate investment of $235,000 in net working capital. The corporate tax rate for the company is 22 percent. The appropriate discount rate is 10 percent.

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