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In capital budgeting, if an EBIT is negative, can the income tax be $0 or would it be a negative amount? This is what I
In capital budgeting, if an EBIT is negative, can the income tax be $0 or would it be a negative amount? This is what I have done so far but I feel like my -$700 tax amount is incorrect. Also, how would I determine the NPV??
Chapter 9-Master Problem 5; 000 Adley & Issc General Hospital is thinking about purchasing a new machine. The new machine would cost $200,000 with an additional $25,000 for installation of the machine The machine will have a life of S years and will be depreciated using the straight line method. The machine can be sold for $15,000 at the end of its life. This machine is expected to produce cost savings of $40,000 the first three years and $60,000 per year after. It will take a $10,000 adjustment to net working capital if the machine is purchased. The company has a required return of 6% and is in the 35% tax bracket. Calculate the NPV of the project and determine if the company should purchase the machine. Yeat cost savings toooo Depreciation 112 03 EBIT Taxes 0,00046,000 , c, eo. 000 o0 200020018000 18000 700 Net Income Yeat OCF Change in 000 Capital Investment -2,0 6 3s(
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