ABC Corp is considering buying a new machine for $440,000. The new machine has an 8-year...

ABC Corp is considering buying a new machine for $440,000.

The new machine has an 8-year life. Assume straight-line depreciation.

The new machine will allow ABC to save $74,000/year.

ABC will sell an old machine for $52,000. The sale will take place on the same day the new machine is bought.

The old machine has an NBV = 18,000. Two years remain on the old machines' depreciable life.

The new machine will require an overhaul in year 5 = $17,000.

ABC has a 21% tax rate.

What is the net present value of the investment using a 6% discount rate?

Expert Solution

ekkarill92 answered 2 years ago

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