• A division of Virginia City Highlands Manufacturing is considering purchasing for $2,500,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machine will be $60,000, but it will save the company $410,000 in labor costs each year. The machine will have a useful life of 10 years and its salvage value in 10 years is estimated to be $300,000. Straight-line depreciation will be used in calculating taxes for this project and the marginal corporate tax is 22 percent. If the appropriate discount rate is 11 percent, what is the NPV of this project?

Answer rating: 100% (QA)

Computation of Present value of cash flows if Machine bought Depreciation Original cost salvage Valu... View the full answer