Purchase of the injection-molding machine be justified

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Reference no: EM131130289

Larson Manufacturing is considering purchasing a new injection-molding machine for S250,000 to expand its production capacity. It will cost an additional $20,000 to do the site preparation. With the new injection-molding machine installed, Larson Manufacturing expects to increase its revenue by $88,000 per year. The machine will be used for six years, with an expected salvage value of $70,000. At an interest rate of 10%, would the purchase of the injection-molding machine be justified?

Reference no: EM131130289

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