A company is considering the purchase of a new bottling machine. It can purchase the machine for $6000 and sells the old machine for $2000.
A company is considering the purchase of a new bottling machine. It can purchase the machine for $6000 and sells the old machine for $2000.The new machine will last for 6 years and save $1500 a year in expenses. The opportunity cost of of capital is 16% and firm’s tax rate is 40%.
If the firm uses straigt line depreciation to a salvage value of zero over a six year period, what are the cash flows of the project in years 0-6? What is the project NPV ?
