Question

In: Finance

A company is considering purchasing a new machine that would cost $60,000 and the machine would...

A company is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its four year life. At the end of four years it is believed that the machine could be sold for $12,000. The machine would increase EBDT by $42,000 annually. the company's marginal tax rate is 34%.

What the RATFCF’s associated with the purchase of this machine?

$31,800

$32,820

$30,452

$29,940

Solutions

Expert Solution

Solution :

The RATFCF’s associated with the purchase of this machine each year is = $ 32,820

Thus the solution is Option 2

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago
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