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Your firm is considering buying a machine for $10,000. The machine will produce annual cost savings of $3000 for the next five years. The machine

Your firm is considering buying a machine for $10,000. The machine will produce annual cost savings of $3000 for the next five years. The machine will be depreciated over the 5 year period using the accelerated depreciation percentages allowed in the US (20%, 32%, 19.2%, 11.52%, 11.52%, 5.76% for each of the years 1,2,,6). At the end of the sixth year, the machine will be sold for a salvage value of $4000. If the WACC is 12% and the tax rate is 35%, should this machine be bought?

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