Define straight-line depreciation

Reference no: EM131477084

Question: A company is considering buying a new machine for one of its factories. The cost of the machine is $60,000 and its expected life span is five years. The machine will save the cost of a worker estimated at $22,500 annually. The book value of the machine at the end of year 5 is $10,000 but the company estimates that the market value will be only $5,000. Calculate the NPV of the machine if the discount rate is 12% and the tax rate is 30%. Assume straight-line depreciation over the five-year life of the machine.

Reference no: EM131477084

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