Answered You can hire a professional tutor to get the answer.

QUESTION

Ownership Year 3yr 1 2 3 4 5 6 7 8 9 10 11 Class of Investment 5yr 7yr 33 20 45 32 15 19 7 12 11 6 100 100 14 25 17 13 9 9 9 4 100 10yr 10 18 14 12 9...

The Ewert Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $108,000, and it will cost another $12,5000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class, and it can be sold after three years for $65,000. (See attachment for MACRS recovery allowance percentages) The machine will require an increase in net working capital (inventory) of $5,500. The milling machine will have no effect on revenues, but it is expected to save the firm $44,000 per year in before-tax operating costs (excluding depreciation), mainly labor. Ewert's marginal tax rate is 34 percent. If the project's required rate of return is 12 percent, should the machine be purchased.

Show more
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question