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

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!