What are the relevant cash flows

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Reference no: EM131062816

Healthy Potions, Inc., a pharmaceutical company, bought a machine at a cost of $2 million five years ago that produces pain-reliever medicine. The machine has been depreciated over the past five years, and the current book value is $700,000. The company decides to sell the machine now at its market price of $1 million. The marginal tax rate is 28 percent.

Part A. What are the relevant cash flows?

Part B. How do they change if the market price of the machine is $600,000 instead?

Reference no: EM131062816

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