Should the company purchase the saw

Reference no: EM132074782

Question: Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $45,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and the other expenses will be $10,000 per year. The machine is expected to sell for $1, 400 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Rocky Mountain's tax rate is 34 percent, and its opportunity cost of capital is 10.30 percent. What is the project's NPV? (Do not round intermediate calculations. Round final answers to the nearest whole dollar, e.g. 5, 275.) Should the company purchase the saw? The company the machine.

Reference no: EM132074782

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Should the company purchase the saw : Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $45,000. The saw will generate revenues of $100,000 per year for five years.

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