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Machine to produce computer keyboards

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Ubowa PLC is considering investing in a machine to produce computer keyboards. The price of the machine will be K400, 000 and its economic life is five years. The machine will be fully depreciated by the straight line method. The machine will produce 10,000 keyboards each year. The price of each keyboard will be K40 in the first year and will increase by 5%per year. The production cost per keyboard will be K20 in the first year and will increase by 10% per year. The corporate tax rate for the company is 30%. If the discount rate is 15%, what should they do?

Reference no: EM132615875

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