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Newco is looking at expanding its business to include Bitcoin Mining, and change their name to BitCo. They will need to purchase $1,000,000 worth of
Newco is looking at expanding its business to include Bitcoin Mining, and change their name to BitCo. They will need to purchase $1,000,000 worth of mining machines. It is estimated that these machines will generate $1,000 in revenue per day. The machines will require 15 days of maintenance per year, during which time they will not produce any revenue. Newco estimates that the machines will cost $100 per day of operation. BitCo also has to pay a commission of 1 penny per dollar of revenue. BitCo has a 7.5% cost of capital and a 25% tax rate. The machines can be sold for 25% of the original cost after 5 years. The machines will be depreciated using straight-line depreciaton over 5 years
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