Straight-line depreciation will be used in calculating taxes

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A division of Virginia City Highlands Manufacturing is considering purchasing for $1,500,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machine will be $50,000 but it will save the company $370,000 in labor cost each year. The machine in labor cost each eyar. The machine will have a useful life of 10 years and its salvage value in 10 years is estimated to be $300,000. Straight-line depreciation will be used in calculating taxes for this project and the marginal corporate tax rate is 32 percent. If the appropriate discount rate is 12 percent, what is the NPV of this project.

Reference no: EM131850216

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