Who Dat Restaurant is considering the purchase of a $39,000 souffle maker. The souffle maker has an economic life of six years and will be fully depreciated by the straight-line method. The machine will produce 2,500 souffles per year, with each costing $2 to make and priced at $7. Assume that the discount rate is 14 percent and the tax rate is 34 percent. Should the company make the purchase?
Answer to relevant QuestionsYou are evaluating two different silicon wafer milling machines. The Techron I costs $450,000, has a three-year life, and has pretax operating costs of $85,000 per year. The Techron II costs $580,000, has a five-year life, ...Consider the following cash flows on two mutually exclusive projects. The cash flows of Project A are expressed in real terms while those of Project B are expressed in nominal terms. The appropriate nominal discount rate is ...Nata, Inc., is considering the purchase of a $540,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will ...Earp Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $820,000 and its economic life is five years. The machine will be fully depreciated by the ...Sony International has an investment opportunity to produce a new stereo HDTV. The required investment on January 1 of this year is $75 million. The firm will depreciate the investment to zero using the straight-line method ...
Post your question