Question
In: Finance
Excelsior Company is evaluating the proposed acquisition of a new production machine. The machine's base price...
Excelsior Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $260,000, and installation costs would amount to $28,000. An additional $10,000 in net working capital would be required at installation. The machine has a class life of 3 years. The machine would save the firm $110,000 per year in operating costs. The firm is planning to keep the machine in place for 5 years. At the end of the fifth year, the firm plans to sell the machine for $120,000. The firm has a required rate of return on investment projects of 12% and a marginal tax rate of 34%. What is the NPV of the project?
Solutions
Formulas for above values are
as follows:
jeff jeffy answered 1 year agoRelated Solutions
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