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Kinky Copies may buy a high-volume copier. The machine costs $200,000 and will be depreciated straight-line over 5 years to a salvage value of $36,000.

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Kinky Copies may buy a high-volume copier. The machine costs $200,000 and will be depreciated straight-line over 5 years to a salvage value of $36,000. Kinky anticipates that the machine actually can be sold in 5 years for $44,000. The machine will save $36,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $18,000. The firm's marginal tax rate is 35%, and the discount rate is 7%. (Assume the net working capital will be recovered at the end of Year 5.) Calculate the NPV Should Kinky buy the machine? Yes No

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