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Calculate the cash flow operating leverage

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Acme Machine Shop, L.L.C. is considering the purchase of a new lathe for $500,000. It will have a life of 5 years. Annual cash inflows in each of the five years are projected to be $150,000. The clinic uses a 20% discount rate for all capital projects. Should they purchase the machine?

Treasure Valley Imaging is considering the purchase of a new piece of equipment that will cost $1,000,000. The projections show it should increase cash inflows by $125,000 in each of ten years. The discount rate is 10%. What is the internal rate of return? Should they fund this purchase?

Valley Planing Co. has fixed costs of $800,000 including depreciation of $100,000. The E.B.I.T.D.A. is $250,000. Calculate the cash flow operating leverage. What does this mean?

Reference no: EM131796252

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