Purchase of a copying machine by a law office is expected to save the office $1,000 a
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Purchase of a copying machine by a law office is expected to save the office $1,000 a year for five years. The machine will cost $5,000 and can be depreciated straight-line for five years ad then sold for $500. Given the law firm's tax rate of 40 percent, what are the annual cash flows arising from the purchase and what is its net present value? Assume a 10 percent discount rate.
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