Rooney, Inc. is considering the purchase of a new machine costing $710,000. The machine's useful life is
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Rooney, Inc. is considering the purchase of a new machine costing $710,000. The machine's useful life is expected to be 9 years with no salvage value. The straight-line depreciation method will be used. The net increase in annual after tax cash flow is expected to be $144,000. Rooney estimates its cost of capital to be 11%. (The present value of a $1 annuity for 9 years at 11% is 5.537, and the present value of $1 to be received in 9 years is 0.391.)
The net present value of the investment in the machine under consideration is:
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
Posted Date: