MANAGERIAL ACCOUNTING HANDOUT PROBLEM 13 Name Score Section 2 Problem (10 points). Mays Industries is considering the purchase of a new machine that it expects to improve its profitability. The machine is expected to produce the following cash revenues and expenses over the next seven years of its useful life. MAYS INDUSTRIES ESTIMATED CASH REVENUES AND CASH EXPENSES FOR CAPITAL INVESTMENT PROJECT Year Cash Revenues Cash Expenses 250,000 s 325,000 340,000 350,000 400,000 350,000 320,000 220,000 255,000 270,000 290,000 300,000 280,000 300,000 The machine is expected to cost $300,000 and have an estimated salvage value of $10,000 at the end ofits useful life. The company will depreciate the machine using 200% (double) declining balance depreciation. The company expects to have a 30% tax rate over the life of the machine and an after tax required rate of return of 11%. Management also wants all investments to pay back their investment in 4.5 years or less