Question
Einstein Inc. is evaluating different equipment. Machine A costs $55,000 per year has a five year life, and costs $15,000 pear year to operate. The
Einstein Inc. is evaluating different equipment. Machine A costs $55,000 per year has a five year life, and costs $15,000 pear year to operate. The machine will be depreciated using straight line and the relevant discount rate is 10%. The machine will have a salvage value of $8,500 at the end of the projects life. The firm has a tax rate of 21%.
a.) What is the operating cash flow in year 1? (Enter a negative value)
b.) What is the NPV of the project? (Enter a negative value and round to 2 decimals)
c.) What is the EAC for the project? (Enter a positive value and round to 2 decimals)
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