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Raphael Restaurant is considering purchase of a $10,000 souffl maker. The souffl maker has an economic life of five years and will be fully depreciated
Raphael Restaurant is considering purchase of a $10,000 souffl maker. The souffl maker has an economic life of five years and will be fully depreciated by the straight-line method. The souffl maker will have zero salvage value at the end of this five year project. Each year the machine will produce 2,000 souffls, with each costing $3 to make and priced at $5. Assume that the discount rate is 14% and the tax rate is 20 percent. What is the (equal) annual cash flow in years 1-5?
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