Your firm needs a computerized machine tool lathe which costs $40,000 and requires $11,000 in maintenance...
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Your firm needs a computerized machine tool lathe which costs $40,000 and requires $11,000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent. Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.) Depreciation tax shield Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project Y Time: Cash flow: NPV 4 $8,600 $3,470 $4,300 $1,640 $420 Should the project be accepted or rejected? O accepted O rejected Your firm needs a computerized machine tool lathe which costs $40,000 and requires $11,000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent. Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.) Depreciation tax shield Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project Y Time: Cash flow: NPV 4 $8,600 $3,470 $4,300 $1,640 $420 Should the project be accepted or rejected? O accepted O rejected
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Related Book For
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
Posted Date:
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