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A machine can be purchased for $10,500 including transportation charges, but installation costs will require $1,500 more. The machine is expected to last four years and produce annual cash revenues of $6,000. Annual cash-operating expenses are expected to be $2,000, with depreciation of $3,000 per year. The firm has a 30 percent tax rate.
a) Determine the relevant after-tax cash flows and prepare a cash-flow schedule.
b) Calculate the payback period for the machine.
c) If the project's cost of capital is 10%, would you recommend buying the machine?
d) Estimate the internal rate of return for the machine.
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Contractual savings organizations provide all of the follwoing services with the exception of -------?
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Calculate the internal rate of return on the following set of cash flows, according to Teichroews economic interpretation of internal rate of return.
Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost $25,000 to buy with an eight-year life and a $5,000 salvage value. Its annual operating costs will be $16,000. Calculate the annual wo..
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