Question 23Builtrite is considering purchasing a new machine that would cost $70,000 and the machine would be depreciated (straightline) down to $0 over its five year life. At the end of four years it is believed that the machine could be sold for $18,000. Thecurrent machine being used was purchased 3 years ago at a cost of $40,000 and it is being depreciated down to zero over its 5year life. The current machine's salvage value now is $20,000. The new machine would increase EBDT by $46,000 annually,Builtrite's marginal tax rate is 34%.What is the TCF associated with the purchase of this machine if it is sold at the end of year 4 (NOT year 5)?$4,000O $11,880O $16,640O $18,000

The final or the last cash flow of the project which includes the salvage value of the equipment is…

Answered: Question 23 Builtrite is considering…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 13PROB

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