Question: Basic problem. Boomerang Inc. is considering a new 4-year project. It will require the purchase of a $4.0 million machine with an additional $100,000 for

Basic problem. Boomerang Inc. is considering a
Basic problem. Boomerang Inc. is considering a new 4-year project. It will require the purchase of a $4.0 million machine with an additional $100,000 for shipping and $200,000 for installation. The machine will be depreciated straight-line to zero over its four-year economic life, after which it will have no salvage value. The project is expected to have sales of 100,000 units per year at a price of $20 per unit. There will be fixed costs of $20,000 per year and variable cost per unit of $6.25 per unit. The company's marginal tax rate is 35%. Their cost of capital is 10 percent

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