Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Your company is considering purchasing a new machine that costs $75,000. The machine is expected to generate additional sales over the next 6 years as
Your company is considering purchasing a new machine that costs $75,000. The machine is expected to generate additional sales over the next 6 years as shown below: Year Sales $ 1 $45,000 2 3 $55,000 $40,000 $30,000 4. 5 $15,000 6 $6,000 The project will require an investment in NWC equal to 6% of the sales expected next year. The machine will be depreciated using the following MACRS schedule: 1 2 3 4 5 6 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% At the end of 6 years, the project will end and the machine will be sold for $19,000. The tax rate is 25% and the discount rate is 15%. Find the NPV of the project. Round your answer to the nearest dollar, for example 1,101. If the answer is negative, include the negative sign, for example -1,101. The following template may be useful. Use it only if you want to. NWC6 Template.xlsx 35,000 43,561 margin of error +/- 50
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started