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RoadRollers Paving Company is considering buying a new asphalt laying machine. The machine costs $2,300,000 and is in a 30% CCA class.Investment in NWC is
RoadRollers Paving Company is considering buying a new asphalt laying machine. The machine costs $2,300,000 and is in a 30% CCA class.Investment in NWC is 200,000 at the start.One time up front training costs are 10,000The machine is expected to have no salvage value at the end of a projected 10 year life.Revenues are expected to be $600,000 per year, and cost are estimated at $220,000 per year.The Cost of Capital for the firmis 12% and the firm is in the 34% tax bracket.
Should the investment be undertaken?
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