a1henson
Mar 9, 2009, 05:35 PM
Purchasing a new copier at $10,000 with the following information... will be depreciated straight-line over 5 years to a salvage value of $20,000. The anticipation that the machine actually can be sold in 5 years for $30,000. The machine will save $20,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $10,000. The marginal tax rate is 35 percent, and the discount rate is 8 percent. Should the machine be bought?