You are considering purchasing a CNC machine which costs $ 150,000 This machine will have an estimated service life of 10 years with a net after tax salvage value of $15,000 Its annual after tax operating and maintenance costs are estimated to be $50,000 To expect an 18 rate of return on investment...

You are considering purchasing a CNC machine which costs $ 150,000. This machine will have an estimated

Question:

You are considering purchasing a CNC machine which costs $ 150,000. This machine will have an estimated service life of 10 years with a net after tax of $15,000. Its annual after-tax operating and maintenance costs are estimated to be $50,000. To expect an 18% rate of return on investment, what would be the required minimum annual after-tax revenues?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...