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Use the information in problem 10 to do the following a

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A machine can be purchased for $10,500, including transporta¬tion charges, but installation costs will require $1,500 more. The machine is expected to last four years and produce annual cash reve¬nues of $6,000. Annual cash operating expenses are expected to be $2,000, with depreciation of $3,000 per year. The firm has a 30 percent tax rate. Determine the relevant after-tax cash flows and prepare a cash flow schedule.

I. Use the information in Problem 10 to do the following: a. Calculate the payback period for the machine.
II. If the project's cost of capital is 10 percent, would you recommend buying the machine?
III. Estimate the IRR for the machine.

Reference no: EM13589739

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