Question
Please provide calculation. Costanza company is considering to buy a machine is as follows: Investment $300,000 Revenue $200,000 Variable costs $80,000 Fixed costs $50,000 (50%
Please provide calculation.
Costanza company is considering to buy a machine is as follows:
Investment | $300,000 |
Revenue | $200,000 |
Variable costs | $80,000 |
Fixed costs | $50,000 (50% is out of pocket cost) |
Weighted average cost of capital | 8% |
Tax rate | 40% |
The machine is considered 10 year property for tax purposes. Salvage value at the end of year ten is expected to be $50,000. Assume cash flows occur at the end of the year. ( Round to the nearest dollar.)
From the given information, the net present value at the end of year four is:
a. 251,600
b. 235,800
c. 310,000
d. 143,500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started