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Dlaon Corporation is planning to buy a machine that will cost $40,000 and depreciate it on a straight-line basis over a 5-year period with no
Dlaon Corporation is planning to buy a machine that will cost $40,000 and depreciate it on a straight-line basis over a 5-year period with no residual value. The tax rate of Dlaon is 30%, and the proper discount rate is 15%. The earnings before taxes from the machine are uncertain, but their expected value is $15,000 a year, with a standard deviation of $3,000. Calculate the probability that the machine will be profitable investment.
a. 44.32%
b. 55.68%
c. -44.32%
d. -55.68%
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