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The management of Casper Company is planning to purchase a new milling machine that will cost $160,000 installed. The old milling machine has been fully
The management of Casper Company is planning to purchase a new milling machine that will cost $160,000 installed. The old milling machine has been fully depreciated but can be sold for $15,000. The new machine will be depreciated on a straight line basis over it's 10 year economic life to an estimated salvage value of $10,000. If this milling machine will save Casper $20,000 a year in production expenses, what are the annual net cash flows associated with the purchase of this machine? Assume a marginal tax rate of 40 percent.
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