Question: A machine that costs $8,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The

A machine that costs $8,000 is expected to operate for 10 years. The estimated at the end of 10 years is $0. The machine is expected to save the company $1,554 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. What is the on this investment?

Step by Step Solution

★★★★★

3.45 Rating (174 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Net investment 8000 NCF 110 R O Dep ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

138-B-C-F-C-B (735).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes...

The company has a marginal tax rate if 40 percent. a study of publicly held companies in this line of business suggests that the required return on equity is about 17 percent. The company's debt is...

A firm is considering purchasing a machine that costs $65,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $35,000 per year in...

Rollerblade, a manufacturer of skating gear, plans to expand its operation in Brighton, England. The expansion will cost $18.5 million and is expected to generate annual net cash flows of 2.2 million...

1) A new machine costs $35,000, and has a useful life of 10 years. Its estimated salvage value at the end of year 10 is $15,000. (a) Determine the depreciation for years 1-10. You should do this in...

A commercial smart oven that costs $150,000 is expected to operate for 6 years. The estimated salvage value at the end of 6 years is $25,000. The oven is expected to save the company $50,000 in...

A commercial smart oven that costs $300,000 is expected to operate for 7 years. The estimated salvage value at the end of 7 years is $40,000. The oven is expected to save the company $70,000 in...

A commercial smart oven that costs $150,000 is expected to operate for 6 years. The estimated salvage value at the end of 6 years is $25,000. The oven is expected to save the company $50,000 in...

The Pew Research poll described in Exercise 1 found that 49% of a sample of 799 teens admitted to misrepresenting their age online to access websites and online services. (Treat this as a simple...

dU Show that four-velocity and four-acceleration are orthogonal. dt 5. Define four-acceleration as A = dP Show that the four force can be completely expressed in terms of the ordinary dt 6. Let...

When you use the SQL UNION operator, the tables output from the queries involved in the UNION must all have the same number of _ _ _ _ _ .

2.14 In a population, mY = 50 and s2 Y = 21. Use the central limit theorem to answer the following questions: a. In a random sample of size n = 50, find Pr1Y 512. b. In a random sample of size n =...

The number of common shares that can be obtained when a convertible security is exchanged is the conversion ratio, which is calculated by dividing the par value of the security by the conversion...

The price at which a convertible security is exchangeable for a common stock is the conversion price. L01

Convertible securities tend to reduce potential conflicts between fixed-income security holders and stockholders, resulting in reduced agency costs.ST1.

Cost of Fishing Lures: Lake Murray Convenience Store vs. Big Fish On-line Store HI Lake Murray Store On-line Store 1. What kind of graph was used to display the data?|Box plot 2. The graphs are...

An urgent!, urgent! and urgent! Challenging University of Cumberland Case study A and statistics question. 2. Find the probability that a normal random variable X with mean m = 1,600 and standard...

6. (1.5 pt) Bob and Ann both make optimal portfolio allocations. Bob has $ 1000 to invest, Ann has $ 2000 to invest. There are 3 assets that they can invest in: a risk free asset with a rate of...