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The Everly Equipment Company purchased a machine 5 years ago at a cost of $ 9 0 , 0 0 0 . The machine had
The Everly Equipment Company purchased a machine years ago at a cost of $ The machine had an expected life of years at the time of purchase, and it is being depreciated by the straightline method by $ per year. If the machine is not replaced, it can be sold for $ at the end of its useful life. A new machine can be purchased for $ including installation costs. Dur ing its year life, it will reduce cash operating expenses by $ per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its year class life rather than its year economic life, so the applicable depreciation rates are and The old machine can be sold today for $ The firms tax rate is and the appropriate WACC is a If the new machine is purchased, what is the amount of the initial cash flow at Year b What are the incremental net cash flows that will occur at the end of Years through c What is the NPV of this project?
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