Question: CAPITAL BUDGETING QUESTION USE THE NET PRESENT VALUE METHOD The Alberta Oil Service Company is considering buying a new machine. The following operating information is

CAPITAL BUDGETING QUESTION USE THE NET PRESENT VALUE METHOD The Alberta

Oil Service Company is considering buying a new machine. The following operating

CAPITAL BUDGETING QUESTION USE THE NET PRESENT VALUE METHOD The Alberta Oil Service Company is considering buying a new machine. The following operating information is provided below: 1 What is the cost of the capital budgeting project at time 0 ? 2 What is the yearly savings after tax on the project? 3 What is the present value of the savings for the project? 4 What is the present value of the salvage value of the machine? 5 What is the CCA tax shield from the machine? 6 What is the cost of the lost tax shield from the salvage? 7 What is the present value of the working capital inflow? 8 INDEPENDENT QUESTION: Assume the NPV IS NEGATIVE. What is the decision on the project based on the NPV of the project? [ACCEPT OR REJECT]

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