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Shaquille Inc. is considering a four - year project to improve its production efficiency. Buying a machine for $ 1 , 0 0 0 ,

Shaquille Inc. is considering a four-year project to improve its
production efficiency. Buying a machine for $1,000,000 is
estimated to result in $300,000 in annual pre-tax cost savings.
The machine falls into Class 8 for CCA purposes (CCA rate of
20 percent per year), and it will have a salvage value at the end
of the project of $358,400. The machine also requires an initial
investment in spare parts inventory of $100,000, that will be
regained at the end of the project. If the tax rate is 40 percent
and its discount rate is 25 percent, should Shaquille buy the
machine?

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