Question
Eggz, Inc., is considering the purchase ofnew equipment that will allow the company to collect loose hen feathers for sale. Theequipment will cost $425,000and will
Eggz, Inc., is considering the purchase ofnew equipment that will allow the company to collect loose hen feathers for sale. Theequipment will cost $425,000and will be eligible for 100 percent bonus depreciation.The equipment can be sold for $25,000at the end of the project in 5 years. Saleswould be $275,000per year, with annual fixed costs of $47,000and variable costsequal to 35percent of sales. The project would require an investment of $25,000inNWC that would be returned at the end of the project. The tax rate is 22percent andthe required return is 9percent.
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