(please explain your answer, showing any calculations that you used to make your decision)
Project Evaluation. Kinky Copies may buy a high-volume copier. The machine costs $100,000
and will be depreciated straight-line over 5 years to a salvage value of $20,000. Kinky anticipates
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 firm’s marginal tax rate is 35 percent, and the discount rate is 8 percent.
Should Kinky buy the machine?
