Considering the installation of a new machine

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ACDC Company is considering the installation of a new machine that costs $150,000. The machine is expected to lead to net income of $44,000 per year for the next 5 years. Using straight-line depreciation, $0 salvage value, and an effective income tax rate of 50%, determine the after-tax rate of return for this investment. If the company's after-tax MARR rate is 12%, would this be a good investment or not? Contributed by Mukasa Ssemakula, Wayne State University.

Reference no: EM131810362

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