In capital budgeting, if there is a case: A company want to buy a machine for a
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Question:
A company want to buy a machine for a project As follows:
A- it costs 20,000$.
B- it will be sold after 3 years as material price.
C- Working Capital Investment is 300$
D- it will increase working capital by 200$
E- it will save the company's costs by 150$ per year.
F- Tax rate = 20%.
I have two questions :
1- What's the terminal flow in year 3?
2- if the project's required rate of return is 15%, should the equipment be purchased?
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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