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Dorothy & George Company is planning to acquire a new machine at a total cost of $57, 200. The machine's estimated life is six years
Dorothy & George Company is planning to acquire a new machine at a total cost of $57, 200. The machine's estimated life is six years and its estimated salvage value is $500. The company estimates that annual cash savings from using this machine will be $12,000 The company's after-tax cost of capital is 7% and its income tax rate is 40%. The company uses straight-line depreciation (non-MACRS-based) (Use Appendix C, Table 1 and Appendix C, Table 2.)(Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round "Payback period" to 2 decimal places and all other answers to the nearest dollar amount.) Required: What is this investment's net after-tax annual cash inflow? Assume that the net after-tax annual cash inflow of this investment is $8,000; what is the payback period? Assume that the net after-tax annual cash inflow of this investment is $8 000; what is the net present value (NPV) of this investment? What are the minimum net after-tax annual cost savings that make the proposed investment acceptable (i.e., the dollar cost savings that would yield an NPV of $0)
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