Evaluating the proposed acquisition of new molding machine

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Reference no: EM131068396

The sharpetouch company is evaluating the proposed acquisition of a new molding machine. the machines purchase price is $108,000 and it would cost another $12,000 to modify it for it to be operational. the machine falls into the MACRS three year class. it would require an increase in networking capital(inventory) of $5,500 at time 0. The modding machine will increase the firm's before tax revenue by $80,000 power year but would also increase its operating costs on before tax basis by $35,000 per year. the molding machine is expected to be used for three years and then be sold for $60,000. sharpetouch marginal tax rate is 40 percent and then projects cost of capital is 12 percent. Should the machine be purchased? why or why not? Support your answer with numeral work.

Reference no: EM131068396

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Evaluating the proposed acquisition of new molding machine : The sharpetouch company is evaluating the proposed acquisition of a new molding machine. the machines purchase price is $108,000 and it would cost another $12,000 to modify it for it to be operational. the machine falls into the MACRS three year clas..

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