Isaac, Inc. is considering purchasing a new machine. The new machine would cost $150,000 with an additional $30,000 for delivery of the machine. The machine will have a useful life of 5 years and will be depreciated using the straight-line method. The machine can be sold for $25,000 at the end of its useful life. This machine is expected to produce cost savings of $35,000 the first two years and $50,000 per year thereafter. A $10,000 adjustment to net working capital will be required if the machine is purchased. The company has a required return of 7% and is in the 35% tax bracket. 

Calculate the NPV of the project and determine if the company should buy the machine.

Answer rating: 100% (QA)

To calculate the net present value NPV of the project we need to discount the cash flows at the requ... View the full answer