Straight line method to depreciate investment for machines

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Reference no: EM131327657

Assume an investment project that has 250,000 dollars of capital cost for purchasing some machines and 150,000 dollars for buying a piece of land at time zero. The project life time is 8 years. This investment yields the annual revenue for 95,000 dollars and operating cost of 25,000 dollars for 8 years (from year 1 to year 8). At the end of the project life (8th year), the land will be sold at 180,000. Consider the straight line method to depreciate the investment for machines equally over 8 years (year 1 to year 8) and apply income tax of 38%. Calculate ATCF and ROR for this project. Please explain your work

Reference no: EM131327657

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