Southside Junk Yard needs to buy a car smasher. The machine would add the following revenues to

Question:

Southside Junk Yard needs to buy a car smasher. The machine would add the following revenues to the business over the next three years:
Year 1 Cash savings = $25,000
Year 2 Cash savings plus additional scrap sales = $40,000
Year 3 Cash savings plus additional scrap sales = $45,000
The initial cost of the machine is $90,000. At the end of three years, its is estimated at $30,000. The firm has a of 12%.
Required:
Using the method, determine whether the company should purchase the machine. (Ignore income tax effects.)

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