Company x is planning a purchase of a new machine the

Reference no: EM13604018

Company X is planning a purchase of a new machine. The expected cost of the machine is 75,000 and it has an expected useful life of 6 yrs with an estimated salvage of 3,000. The machine is expected to produce cost savings of 23,000 per yr in reduced labor costs and cash operating costs to run machine of 5,000 per yr. Assume company x is in the 34% tax bracket and has a minimum desired rate of rteturn of 12% on this investment. Determine the: (a) payback period (b) ARR (c) NPV (ignoring taxes)

Reference no: EM13604018

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