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Q 2 . Capital Budgeting. You are evaluating two different machines. The Piton I costs $ 4 5 0 , 0 0 0 , has
Q Capital Budgeting. You are evaluating two different machines. The Piton I costs $ has a fiveyear life that will be depreciated down to zero using the straightline method. The machine is expected to save the company $ in operating costs pretax each year it is in operation. Assume the machine can be sold for $ at the end of its useful life. The Piton II costs $ has a sevenyear life that will be depreciated down to zero using straightline method. Piton II will only save the company $ per year before taxes but will have a salvage value of $ at the end of its life. If your tax rate is percent and your discount rate is percent, compute the NPV and IRR for both machines. Which do you prefer? If Piton required an immediate investment of $ of working capital, would your answer change? My question for this question is "Can you please show calculations of why een if you invest $ in NWC there is no change in acceptance?"
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