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Rooney incorporated is considering the purchase of a new machine costing $640,000. the machine's useful life is expected to be 8 years with no salvage
Rooney incorporated is considering the purchase of a new machine costing $640,000. the machine's useful life is expected to be 8 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 $147,000. Rooney estimates its cost of capital to be 14% (the present value of a $1 annuity for 8 years at 14% is 4.639, and the present value of $1 to be received in 8 years is 0.351)
The net present value of the investment in the machine under consideration is:
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