Question
Tocserp is considering the purchase of a new machine that will produce widgets. The widget maker will require an initial investment of $10,000 and has
Tocserp is considering the purchase of a new machine that will produce widgets. The widget maker will require an initial investment of $10,000 and has an economic life of five years and will be fully depreciated by the straight line method. The machine will produce 1,500 widgets per year with each costing $2.00 to make. Each will be sold at $4.50. Assume Tocserp uses a discount rate of 14 percent and has a tax rate of 34 percent. What is the NPV of the project and should Tocserp make the purchase.
Please explain with excel formulas
Your firm's discount rate is 30 percent.You are considering the purchase of Truck A or Truck B.Truck A costs $100, has a useful life of 3 years, no salvage value and maintenance costs of $10 per year.Truck B costs $80, has a useful life of 2 years, no salvage value and maintenance costs of $15 per year.Which truck should you select and why?
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