Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
please write out answer do not use excel please. Your company is considering expanding operations and buying a new machine to handle the increased volume.
please write out answer do not use excel please.
Your company is considering expanding operations and buying a new machine to handle the increased volume. The machine's basic price is $100,000, and it will cost another $15,000 to modify it for special use by your firm. The machine falls into the MACRS three-year class, and it will be sold after three years for $15,000. Use of the machine will require an increase in net working capital (inventory) of $3,000. The machine will increase revenues by $50,000 per year, and is expected to increase annual costs by $5,000. The firm's marginal tax rate is 40 percent. MACRS3: Year 1 = .33; Year 2 = .45; Year 3 = .15; Year 4 = .07 What is the IRR? 12.5% 9.7% 18.4% 6.3%Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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