4. You are considering purchasing a new wood saw that costs Rp 126,500,000. The saw will...

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4. You are considering purchasing a new wood saw that costs Rp 126,500,000. The saw will generate revenues of Rp 48,000,000 per year for five years. The cost of materials and labor needed to generate these revenues will total Rp 1,120,000 per year, and other cash expenses will be Rp 1,090,000 per year. The machine is expected to sell for Rp 10,000,000 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Your company's tax rate is 25 percent, and its opportunity cost of capital is 17 percent. Should the company purchase the saw? Explain why or why not? Time, years Incremental Revenue Material & Labor costs Depreciation Other cash expenses Earnings before taxes Taxes Net income Net operating cash flow Cost of new machine Terminal value Market value Book value Taxes Terminal after tax cash flow Free cash flow 0 1 2 3 5 4. You are considering purchasing a new wood saw that costs Rp 126,500,000. The saw will generate revenues of Rp 48,000,000 per year for five years. The cost of materials and labor needed to generate these revenues will total Rp 1,120,000 per year, and other cash expenses will be Rp 1,090,000 per year. The machine is expected to sell for Rp 10,000,000 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Your company's tax rate is 25 percent, and its opportunity cost of capital is 17 percent. Should the company purchase the saw? Explain why or why not? Time, years Incremental Revenue Material & Labor costs Depreciation Other cash expenses Earnings before taxes Taxes Net income Net operating cash flow Cost of new machine Terminal value Market value Book value Taxes Terminal after tax cash flow Free cash flow 0 1 2 3 5