Question

Kinky Copies may buy a high-volume copier. The machine costs $80,000 and will be depreciated straight-line over 5

years to a salvage value of $14,000. Kinky anticipates that the machine actually can be sold in 5 years for $23,000. The machine will save $14,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $7,000. The firm’s marginal tax rate is 35%, and the discount rate is 10%. (Assume the net working capital will be recovered at the end of Year 5.)

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"