Question
You are evaluating the purchase of new machinery for a project being proposed by the CFO of your company. The cost of the machinery is
You are evaluating the purchase of new machinery for a project being proposed by the CFO of your company. The cost of the machinery is $240,000, and it would cost another $60,000 to adapt it to your firms purposes. The machinery would be sold after 6 years for $50,000. Use of the machinery would require an increase in Net Working Capital of $15,000, which will be recovered in the last year of the project. The machinery is expected to save the firm $58,000 per year in operating costs. Using the above information, map the cash flows on a timeline.
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