A new machine costs $1,050,110 and falls in a 34.00% CCA class. The machine will have zero value after 5 years of use but will save $487,790 annually in operating costs before taxes in those five years. Assume a tax rate of 36.33%. Using a required return of 17.27%, what is the NPV of the machine purchase?

A new machine costs $1,050,110 and falls in a 34.00% CCA class. The machine will have zero value after 5 years of use but will save $487,790 annually in operating costs before taxes in those five years. Assume a tax rate of 36.33%. Using a required return of 17.27%, what is the NPV of the machine purchase?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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