Question
he Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $54,000, and it would cost another $6000
he Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $54,000, and it would cost another $6000 to modify it for special use for your firm. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $24,000. The machine would require an increase in net working capital (inventory) of $2,500. The milling machine would have no effect on revenues, but it is expected to save the firm$25,000 per year I before-tax operating costs, mainly labor. Campbell's margin tax rate is 40 percent. MACRS allowance percentages are 0.33, 0.45, and 0.15 for years 1,2 and 3 respectively what is the new project NPV if the project cost of capital is 6%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started