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Scott Manufacturing, Inc., is considering the purchase of a $300,000 machine. The machine will be fully depreciated over its life of five years to a
Scott Manufacturing, Inc., is considering the purchase of a $300,000 machine. The machine will be fully depreciated over its life of five years to a zero salvage value using the straight-line method. The market value of the machine will be $40,000 in five years. The machine will generate revenues of $200,000 and will cost $100,000 to operate each year. Purchasing the machine will increase the firm's net working capital by $10,000. All net working capital will be recovered at the end of the project's life. The corporate tax rate is 34 percent. What is the NPV if the appropriate discount rate is 12
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