Sunday, August 14, 2011

Can anyone help me with the answer and solution to this Finance question?

A company is considering the purchase of a new machine that will reduce manufacturing costs by $5,000 annually. The company will use the MACRS accelerated method to depreciate the machine, and it expects to sell the machine at the end of its 5-year operating lifefor $10,000. The company expects to be able to reduce net operating working capital by $15,000 when the machine is installed, but requireed net operating working capital will return to its original level when the machine is sold after 5 years.The company's marginal tax rate is 40%, AND IT USES A 12% WACC to evaluate projects of this nature. The applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.f the machin costs $60,000,what is the project's NPV?

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