Question
Simon Co. is evaluating different equipment. Machine A costs $65,000 per year has a five-year life, and costs $20,000 per year to operate. The machine
Simon Co. is evaluating different equipment. Machine A costs $65,000 per year has a five-year life, and costs $20,000 per year to operate. The machine will be depreciated using straight-line and the relevant discount rate is 10%. The machine will have a salvage value of $10,000 at the end of the project\'s life. The firm has a tax rate of 21%.
a. Calculate the EAC for the project.
b. Calculate the NPV of project.
c. Calculate the operating cash flow in year 1.
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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