Find the minimum amount of uncertain ebit

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Monroe Corporation needs a machine, which will cost $100,000. Monroe will depreciate it on a straight-line basis over 5 years with no resale value. The tax rate of Monroe is 28%, and its after-tax cost of capital is 11%. The machine will have an EBIT of $18,000 a year for the first five years, and then an uncertain amount for the next five years, years 6 through 10. Find the minimum amount of this uncertain EBIT, which will make the purchase of this machine acceptable.

Reference no: EM132673253

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