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You are tasked with evaluating the purchase of a super computer for the control room. The base price is $400,000 and it would cost another
You are tasked with evaluating the purchase of a super computer for the control room. The base price is $400,000 and it would cost another $100,000 to modify the machine to install the machine. The equipment falls in the MACRS 3 year class of depreciation with rates of 33%, 45%, 15%, and 7%. The machine would require an investment in hardware (inventoryet operating working capital) of $22,850. The machine would produce revenue of $300,000 per year with costs of $80,000 per year. The firm's tax rate is 20% The firm plans on selling the machine at the end of three years for $150,000 and recovering their investment in net working capital at that time as well. What is the initial investment in the machine
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