A machine cost $80,000. Depreciation is calculated straight line equal amounts over 4 years
A machine cost $80,000. Depreciation is calculated straight line equal
amounts over 4 years. Every year the machine increases cash flows by an amount of $30,000. Taxes, Opportunity Cost have all been accounted for in this number. There is not net working capital. After 3 years when the machine has only been depreciated for 3 years and therefore the book value is not zero, the machine is sold for $30,000. This, therefore is a 3 year project. The rate of discount is 8% and the tax rate id 36%. What is the NPV of installing the machinery?