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Kinky Copies may buy a high-volume copier. The machine costs 100,000 and will be depreciated straight-line over 5 years to salvage value of 20,000. Kink
Kinky Copies may buy a high-volume copier. The machine costs 100,000 and will be depreciated straight-line over 5 years to salvage value of 20,000. Kink anticipates that the machine can be sold in 5 years for 30,000. The machine will save 20,000 a year in labour costs but will require an increase in working capital, mainly paper supplies of 10,000. The firm's marginal tax rate is 35%. Should Kinky purchase the machine? The opportunity cost of capital is 8%.
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