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# Use this information for the next 3 questions: Lugar Industries is considering an investment in a new machine with the following information:

Use this information for the next 3 questions:

Lugar Industries is considering an investment in a new machine with the following information:

Machine cost 250,000

Salvage value 50,000

Life 5 years

Working Capital $0 (no working capital needed)

Net operating expense savings:

End of Year 1 $ 50,000

End of Year 2 $ 90,000

End of Year 3 $110,000

End of Year 4 $120,000

End of Year 5 $120,000

WACC 10%

Tax rate 40%

Assumed salvage

value of the machine

at end of 5 years is $50,000 (You will sell this machine at the end of the project for $50,000)