Question
Gravina Company is planning to purchase a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine
Gravina Company is planning to purchase a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine will generate additional cash revenues of $1,700 a year. Gravina will incur no additional costs except for depreciation. Its income tax rate is 40%. (Use Table 1 and Table 2.) Required: 1. What is the maximum amount that Gravina Company should invest if it desires to earn an internal rate of return (IRR) of 13%? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)
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