Thornley Machines is considering a 3-year project with an initial cost of $618,000. The project will not
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Thornley Machines is considering a 3-year project with an initial cost of $618,000. The project will not directly generate sales, but it will reduce operating costs by $265,000 per year. Equipment is depreciated on a straight-line basis to zero book value over the life of the project. At the end of the project, the equipment will sell for an estimated value of $60,000. The tax rate is 34%. The project will require $23,000 in additional inventory for parts and accessories. Should this project be implemented if Thornley requires a 9% rate of return? Why or why not?
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
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