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Rooney, Inc. is considering the purchase of a new machine costing $750,000. The machine's useful life is expected to 9 years with no salvage value.
Rooney, Inc. is considering the purchase of a new machine costing $750,000. The machine's useful life is expected to 9 years with no salvage value. The straight-line depreciation method will be used. The net increase in annual after tax cash flow is expected to be $157,000. Rooney estimates its cost of capital to be 12%. (The present value of a $1 annuity 9 years at 12% is 5328, and the present value of $1 to be received in 9 years is 0.361.) e net present value of the investment in the machine under consideration is: Multiple Choice $113,750 $157,000 $86,496 $83,333
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