Builtrite is considering purchasing a new machine that would cost $90,000 and the machine would be...
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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 $35,000. The current machine being used was purchased 3 years ago at a cost of $70,000 and it is being depreciated down to zero over its 5- year life. The current machine's salvage value now is $20,000. Also, a higher level of inventory would be needed in the amount of $2000 for the new machine. The new machine would increase EBDT by $56,000 annually. Builtrite's marginal tax rate is 34%. What is the TCF associated with the purchase of this machine? 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 $35,000. The current machine being used was purchased 3 years ago at a cost of $70,000 and it is being depreciated down to zero over its 5- year life. The current machine's salvage value now is $20,000. Also, a higher level of inventory would be needed in the amount of $2000 for the new machine. The new machine would increase EBDT by $56,000 annually. Builtrite's marginal tax rate is 34%. What is the TCF associated with the purchase of this machine?
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To calculate the Total Cash Flow TCF associated with the purchase of the new machine we need to cons... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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