Reduce pretax operating costs-should we accept the project

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Reference no: EM131554738

Consider a $10,000 machine that will reduce pretax operating costs by $3,000 per year over the next five years. It will not require any changes in net working capital and is expected to have a salvage value of $1,000 in year 5. Assume 5-year MACRS and a tax rate of 34%. The discount rate is 10%. Should we accept the project? Please provide step by step solution with formula if possible.

Reference no: EM131554738

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