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Marcus Inc is considering the purchase of a new machine. The management of Marcus Inc. has hired you, a high-priced consultant, to help them
Marcus Inc is considering the purchase of a new machine. The management of Marcus Inc. has hired you, a high-priced consultant, to help them make the decision. You have been given the following information: . The new machine is not expected to affect revenues, but operating expenses will be reduced by $10,000 per year for 10 years. The old machine is now 5 years old with 10 years of its scheduled life remaining. It was purchased for $45,000 and depreciated on a straight-line basis to zero over 15 years. Its salvage value is expected to be $5,000 at the end of 15 years. The old machine has a current market value of $25,000. The new machine will be depreciated straight-line over its 10-year life to zero. Its salvage value is expected to be $10000. . The corporate tax rate is 21%. The firm's cost of capital is 10% What is the cash flow of year 0?
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