Deducted from the before-tax operating advantage

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The Majestic Corporation has an Opportunity to replace a machine with a new $10,000 unit that is expected to last for 10 years (no salvage) and save the firm $4,000 per year in labor and material costs. If taxes (at a 50 percent rate) are taken into account in the calculation, what is the payback period? flint: Taxes must be paid on savings less any expenses. Depreciation is an expense that should be deducted from the before-tax operating advantage of $4,000 per year.

Reference no: EM13954040

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