Considering investment in machine

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Reference no: EM131924183

Please answer both or none.

a. You are considering an investment in a machine that will cut your company's costs significantly. The cash flows are as follows: Investment amount: $80,000. Cash flows: Year 1--$30,000; Year 2--$35,000; Year 3--$50,000. Given a cost of capital of 15%, calculate the NPV of the project.

b. You invest in a project that has a depreciable asset. The asset is depreciable under the 5year MACRS category. The depreciation percentages for all six years are: 0.20, 0.32, 0.192, 0.115, 0.115, 0.058. On an asset worth $150,000, how much depreciation do you get to claim in year 3?

Reference no: EM131924183

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