The capital budgeting decision

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The Capital Budgeting Decision
[A] Explain why firms do not consider sunk costs in capital budgeting decisions?

[B] If a firm faces a capital constraint explain how this may negatively impact shareholder wealth maximization?

[C] A new machine costing $200,000 is expected to save the Company B $25,000 per year for 5 years before depreciation and taxes. The machine will be depreciated on a straight-line basis for a 5-year period to an estimated salvage value of $0. The firm's marginal tax rate is 40 percent.

What are the annual net cash flows associated with the purchase of this machine?

Compute the net investment (NINV) for this project?

Reference no: EM13530586

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