Machining center will belong to manufacturing company

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ABC Company will purchase a machining center for $1,500,000. ABC will depreciate the machining center using MACRS depreciation. The machining center will be leased to a manufacturing company who will pay ABC $350,000 annually for 8 years. At the end of the period, the machining center will belong to the manufacturing company. ABC has a 34% incremental tax rate with a 10% after tax MARR. Is this a good investment for ABC?

Reference no: EM131896557

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