Question: A corporation is considering purchasing a machine that will save $ 1 5 0 , 0 0 0 per year before taxes. The cost of
A corporation is considering purchasing a machine that will save $ per year before taxes. The cost of operating the machineincluding maintenance is $ per year. The machine will be needed for five years, after which it will have a zero salvage value. MACRS depreciation will be used, assuming a threeyear class life. The marginal income tax rate is If the firm wants return on investment after taxes, how much can it afford to pay for this machine?
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