The company is considering the purchase of a new machine. The details are as follows :

The cost of the machine is $900,000 The machine will be depreciated over 10 years to zero book value.

The company intends to use the machine for only 5 years, and will sell the machine at $600,000 (at the end of year 5)

The company would need to pay a marketing consultant $50,000 in year 1 for advice on the most effective adverting plan.

The company expects revenue of $520,000 per year.

The company expects additional annual costs of $220,000 per year.

Tax rate is 30%

Cost of capital is 14%