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Kinky Copies may buy a high-volume copier. The machine costs $50,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually
Kinky Copies may buy a high-volume copier. The machine costs $50,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually can be sold in 5 years for $16,000. The machine will save $24,000 a year in (after-tax) labor costs but will require an increase in working capital, mainly paper supplies, of $4,000. The firms tax rate is 21%, and the discount rate is 15%. (Assume the net working capital will be recovered at the end of Year 5)
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