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Smyth and Wessin is considering investing in a bullet-proof vest machine. The machine has an estimated cost of $150,000 and a $9,000 salvage value. The
Smyth and Wessin is considering investing in a bullet-proof vest machine. The machine has an estimated cost of $150,000 and a $9,000 salvage value. The five year project has estimated net income of $10,800 each year. The required rate of return is 12% and the cost of capital is 10%. Hint, calculate depreciation expense and convert NI to CF. Make sure you remember how the salvage value affects cash flows.
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