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This is the solution: I have absolutely no idea how they were able to construct the 2cd chart, like how did they find the net
This is the solution:
I have absolutely no idea how they were able to construct the 2cd chart, like how did they find the net initial outlay, tax savings or how they found IRR or how the salvage value went from 0 to 10,000! and basically everything honestly. I was hoping someone could please explain what the heck is going on! thank you!
Practice Problem 4 EXISTING SITUA TION: PROPOSED SITUATION: 1 full time mach. operator--salary $20,000/year Fully automated machine: no operator required Cost of machine--$55,000 Cost of maintenance-$5,000 per year I Cost of defects--$5,000 per year installation fee --$5,000 Original cost of old machine----$30,000 Cost of maintenance--$6,000 per year Expected life Cost of defects--$2,000 per year --10 years Age--5 years old Expected life-5 years Expected salvage value salvage value--$0 Depreciation method-Straight Line Depreciation method --Straight Line Current market value --$10,000 Marginal tax rate--34 Required Rate of Return--15% I Using the above information, Evaluate this automated machine proiect using 1) PP 2) NPV 3) Pl 4) IRR I Should this project be accepted? (Note: For this question, please assume that capital gains are taxed at the same 34% as ordinary incomes.)Step by Step Solution
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