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XYZ Manufacturing is considering the acquisition of a new machine to expand its production capacity. The machine costs $ 2 , 5 0 0 ,
XYZ Manufacturing is considering the acquisition of a new machine to expand its production capacity. The machine costs $ and has a useful life of years with no salvage value. It is expected to generate additional revenues of $ per year. Operating expenses, excluding depreciation, are projected to be $ per year. The company uses straightline depreciation and is subject to a corporate tax rate. XYZs cost of capital is
Calculate the following:
The annual depreciation expense.
The aftertax operating cash flows.
The Net Present Value NPV of the project.
The Internal Rate of Return IRR
The Modified Internal Rate of Return MIRR
Should XYZ Manufacturing proceed with the acquisition of the new machine?
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