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You need to evaluate the purchase of a new molding machine. The equipment s basic price is $ 1 1 6 , 4 9 1

You need to evaluate the purchase of a new molding machine. The equipments basic price is $116,491, and it would cost another $12,943 to modify it for special use by your firm. The molding machine, which falls into the MACRS 3-year class, would be sold after 3 years for $46,596. The MACRS rates for the first three years are 0.3333,0.4445, and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $6,850. The machine would have no effect on revenues, but it is expected to save the firm $50,365 per year in before-tax operating costs, mainly labor. The firms marginal federal-plus-state tax rate is 21.0% and its cost of capital is 14.0%. How much is the year 2 NOPAT for this project?

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