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Garcia's Truckin' Inc is considering the purchase of a new production machine for $300,000 The purchase of this machine will result in an increase in

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Garcia's Truckin' Inc is considering the purchase of a new production machine for $300,000 The purchase of this machine will result in an increase in earnings before interest and taxes of $80,000 per year To operate the machine properly workers would have to go through a brief training session that would cost $3,000 after taxes It would cost $5,000 to install the machine properly Also, because this machine is extremely efficient its purchase would necessitate an increase in inventory of $20,000 This machine has an expected life of 10 years, after which it will have no salvage value Finally to purchase the new machine, k appears that the firm would have to borrow $100,000 at S percent interest from its local bank resulting in additional interest payments of $8,000 per year Assume simplified straight line depreciation and that the machine is being depreciated down to zero, a 31 percent marginal tax rate, and a required rate of return of 14 percent What is the initial outlay associated with this protect? What are the annual after-tax cash flows associated with tins project for years 1 through 9? What is the terminal cash flow m year 10 (what is the air.ua! after tax cash flow a year 10 phas any additional cash flows associated with the Should the machine be purchased? What is the initial outlay associated with this project

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