Question
GPSC company is the manufacturer of Macaron and working with KEB Machinery company. GPSC company consider whether buy the machinery from KEB Machinery or not.
GPSC company is the manufacturer of Macaron and working with KEB Machinery company. GPSC company consider whether buy the machinery from KEB Machinery or not. The GPSC company has a machine to produce three types of macarons with ingredients of lemon, strawberry, chocolate. The price of the macaron is 7 TL/unit. Demand for the macaron is 2,000/year. The expense for production of three types of macaron is 2TL/unit with regards of inflation rate. The machine cost 30,000 TL and depreciated straight line over 4 years to a value of 0. It will be sold for scrap metal after 4 years for 6,000 TL (assume selling of equipment takes place at the end of year 4). The firm believes that Working Capital at each date must be maintained at a level of 8% of next years forecast sales. The company has negotiated a 10% increase in selling price to compensate to inflation. Should GPSC bit for the purchase of macaron machine, if the discount rate for the project is 18% and the tax rate is 22%?
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