Consider the following data:

• A machine costs $900. This investment is tax-deductible.
• The machine will generate operating profits before depreciation of $500 per year for 4 years. The first cash flow happens at the end of the first year after the machine is put in place.
• Depreciation is not tax-deductible.
• The tax rate is 21%
• There is no salvage value at the end of the four years (the machine is worthless), and no required working capital investment.

Compute the NPV if the discount rate is 8%.

Answer rating: 100% (QA)

a Initial cash outlay purchase cost 900 b Cash flow from year 1 to ... View the full answer