Intro

Better Tires Corp. is planning to buy a new tire making machine for $$60,000$ that

would save it $$50,000$ per year in production costs. The savings would be

constant over the project's $3-$year life. The machine is to be linearly depreciated

to zero and will have no resale value after $3$ years.

The appropriate cost of capital for this project is $10\%$ and the tax rate is $21\%.$

Part $1$

Attempt $1/5$ for $10$ pts$.$

What is the project cash flow in each year of operation $($years $1$ to $3)?$

Part $2$

Attempt $\frac{1}{5}$ for $10$ pts$.$

What is the NPV of this project?