Question: 4. Consider the following data - A machine costs $950 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US
| 4. Consider the following data | |||||||||
| - A machine costs $950 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US corporate tax code of 2018. | |||||||||
| - This company has current pre-tax profits from other projects that are greater than $950, so it can take full advantage of the investment tax break above in year 0. | |||||||||
| - The machine will generate operating profits before depreciation (EBITDA) of $520 per year for 5 years. The first cash flow happens one year after the machine is put in place (year 1). | |||||||||
| - Depreciation is not tax-deductible. Notice that you do not need to calculate depreciation at all to solve this problem since it has no effect on taxes. | |||||||||
| - The tax rate is 21% | |||||||||
| - There is no salvage value at the end of the five years (the machine is worthless), and no required working capital investment. | |||||||||
| Compute the NPV of the project if the discount rate is 8%. Please show your work below, not just the final answer PLEASE SHOW EXCEL WORK | |||||||||
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