Builtrite is considering purchasing a new machine that would cost $50,000 and the machine would be depreciated
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Question:
Builtrite is considering purchasing a new machine that would cost $50,000 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 $14,000. The current machine being used was purchased 3 years ago at a cost of $41,000 and it is being depreciated down to zero over its 5 year life. The current machine's salvage value now is $21,000. The new machine would increase EBDT by $46,000 annually. Builtrite’s marginal tax rate is 34%.
What the RATFCF’s associated with the purchase of this machine?
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