Calculate the project net investment

Reference no: EM13292921

Johnson Poducts is considering purchasing a new milling machine that costs $100,000. The machine's installation and shipping costs will total l$2,500. If accepted, the milling machine project will require an initial net working capital investment of $20,000. Johnson plans to depreciate the machine on a straight-line basis over a period of 8 years. About a year ago, Johnson paid $10,000 to a consulting firm to conduct a feasibility study of the new milling machine. Johnson's marginal tax rate is 40 percent.

a. Calculate the project's net investment (NINV).
B. Calculate the annual straight-line depreciation for the project.
c. Calculate MACRS depreciation assuming this is a 7-year class asset (Appendix 9A).

Reference no: EM13292921

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