Evaluate the project on a pre-tax basis

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Reference no: EM13263582

You are considering buying a machine which costs $1 200, has a 5-year life and would be depreciated straightline to a salvage value of $200. The machine would start generating revenues one year from now. Annual revenues and operating costs would be $400 and $150 respectively. If your tax rate is 30 percent and your cost of capital is 10 percent, what is the NPV of this project, assuming that you should evaluate the project on a pre-tax basis?

Reference no: EM13263582

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