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)