Considering the acquisition of new machine

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Superfast Burger Restaurant is considering the acquisition of a new machine that would reduce operating costs by $160,000 per year throughout its life. The machine has a cost of $480,000 and has an expected salvage value of $40,000 at the end of 4 years. For tax purposes, the restaurant plans to write off the $480,000 cost over the four-year life of the machine, using DDB, producing a tax shield from depreciation of $81,600, $40,800, $20,400, and $6,800 for years 1-4, respectively. The company has a 34 percent tax rate and using 12% interest rate. Required (Round all calculations to the nearest dollar.): Prepare a schedule computing the net present value of the company’s investment in the machine.

Reference no: EM131560594

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