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Equivalent annual cash flow associated with machine

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Reference no: EM132611212

Consider a machine with the following specifications:

  • Cost = $10,000 upfront to purchase, then $2,000/yr operating expenses thereafter
  • Useful life = 4 years, with annual depreciation expense of $2,500/yr
  • Machine can be sold at the end of its useful life for $1,000

Suppose the relevant occ is 12% and the tax rate is 30%. What is the equivalent annual cash flow (EACF) associated with this machine?

Reference no: EM132611212

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