Question: Builtrite is considering purchasing a new machine that would cost $90,000 and the machine would be depreciated (straight line) down to $0 over its five
Builtrite is considering purchasing a new machine that would cost $90,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The current machine being used was purchased 3 years ago at a cost of $70,000 and is being depreciated down to zero over its 5 year life. The current machines salvage value now is $20,000. The machine would increase EBDT by $60,000 annually. Builtrites marginal tax rate is 34%. What is RATFCFs associated with the purchase of this machine?
$38,020
$40,960
$43,360
$44,640
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