Advise mintay corporation to purchase the machine

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Question - Mintay Corporation spent $25,000 on a consultant review of their production processes. The consultants have recommended the purchase of new machinery to automate manual processes. The machine will cost $100,000 to buy and $10,000 to install.  Training to use the machine will cost $5,000.  It is expected to increase net revenues by $60,000 per year.  It has an estimated useful life of 5 years with a scrap value of $10,000.  The machine falls into a 10% CCA asset class and the company already has millions of dollars of assets in this class.  The company is subject to a tax rate of 40% and its after-tax required rate of return is 10%.

Required - Using NPV analysis, would you advise Mintay Corporation to purchase the machine?

Reference no: EM133088008

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