Create a time-line spreadsheet which will show the present

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Reference no: EM13480351

Assume that a large copy machine is being purchased by your employer. the cost is 200.000$. the manufacturer claims it has a useful life of 8 years. this machine will lower operating costs by 40.000$ per year for the 8 years. you may assume that all lower operating costs occur right at the end of each year, and that any income tax payments also have to be paid at the end of the year. It is projected that the machine, at the end of 8 years, will have salvage value of about 20,000$. This corporation has a minimum requied yield of 14% on all capital investments. This company is in a 30% tax bracket.

Create a time-line spreadsheet which will show the Present value of each elementof this proposed purchase( purchase, operating cost savings, incom tax eff of lower operating costs, sale at end of 8 years. Then calculate the net present value of this proposed purchase.

Reference no: EM13480351

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