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Willing to pay for the machine today

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Reference no: EM131092726

You are thinking about investing in a new machine for your company. The after-tax cash flows expected are year 1 = $10,000; year 2 = 20,000; year 3 = 30,000. You expect to incur a major overhaul expense in year 4 leading to a cash flow of -$20,000 for that year. In year 5, you expect to generate $20,000 in cash flow from operations and an additional $30,000 in cash flow upon the sale of the machine. Your required rate of return is 10%. What is the most you are willing to pay for the machine today?

Reference no: EM131092726

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