Should this machine be purchased

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Reference no: EM13156731

A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. The firm's cost of capital is 14 percent. Based on the internal rate of return criterion, should this machine be purchased?

Reference no: EM13156731

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