Question: Rob Roy Corporation has been using its present facilities at its annual full capacity for the last three years. Still, the company is unable to

Rob Roy Corporation has been using its present facilities at its annual full capacity for the last three years. Still, the company is unable to keep pace with continuing demand for the product. To expand manufacturing capacity and take advantage of the demand, Rob Roy must acquire equipment costing $650,000. The equipment has no salvage value at the end of its useful life of ten years. The company has been paying 25% for combined federal, state, and local income taxes, a rate that is not expected to change during the period of this investment. Rob Roy uses straight-line depreciation and a 10% discount rate in evaluating capital investments. The projected pretax operating cash inflows are as follows:
\table[[Year,Pretax Cash Inflow,Year,Pretax Cash Inflow],[1,$65,000,6,$300,000
Rob Roy Corporation has been using its present

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