Dorothy & George Company is planning to acquire a new machine at a total cost of $
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Question:
Dorothy & George Company is planning to acquire a new machine at a total cost of $ The machines estimated life is years and its estimated salvage value is $ The company estimates that annual cash savings from using this machine will be $ The companys aftertax cost of capital is and its income tax rate is The company uses straightline depreciation nonMACRSbasedUse Appendix C Table and Appendix C Table Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round "Payback period" to decimal places and all other answers to the nearest dollar amount.
Required:
What is this investments net aftertax annual cash inflow?
Assume that the net aftertax annual cash inflow of this investment is $; what is the payback period in years?
Assume that the net aftertax annual cash inflow of this investment is $; what is the net present value NPV of this investment?
What are the minimum net aftertax annual cost savings that make the proposed investment acceptable ie the dollar cost savings that would yield an NPV of $
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
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