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Weir's Trucking, Inc, is considering the purchase of a new production machine for $100, 000. The purchase of this new machine will result in an

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Weir's Trucking, Inc, is considering the purchase of a new production machine for $100, 000. The purchase of this new machine will result in an increase in earnings before interest and taxes of $25,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $5,000 after tax. In addition, it would cost $5,000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $25,000. This machine has an expected life of after which it will have no salvage value. Finally, to purchase the new machine if appears that the firm would have to borrow $80, 000 at 10 percent interest from Us local bank, resulting in additional interest payments of S8,(XX) per year. Assume! simplified straight-line depreciation, that this machine is being depreciated down to zero, a 34% marginal tax rate, and a required rate of return of 12%. What is the initial outlay associated with this project? What are the annual after-tax cash flows associated with this project for years 1 through 9? What is the terminal cash flow in year 10 (what is the annual after-tax cash flow in year 10 plus any additional cash flows associated with termination of the project)? should this machine be purchased

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