New concrete mixer to replace an inefficient older model

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Reference no: EM13805985

Auburn Concrete Inc. is considering the purchase of a new concrete mixer to replace an inefficient older model that is completely worn out. If purchased, the new machine will cost $90,000 and is expected to generate savings of $40,000 per year for five years at the end of which it will be sold for $20,000. The mixer will be depreciated to a zero salvage value over three years using the straight line method. Develop a five year cash flow estimate for the proposal. Auburn’s marginal tax rate is 30%. Work to the nearest thousand dollars.

Reference no: EM13805985

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