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What is the npv of the project cash flows

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Reference no: EM132541042

MTM Inc., is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually. MTM will use the straight-line method to depreciate the machine, and it expects to sell the machine at the end of its 5 year life for $10,000. The firm expects to be able to reduce working capital by $15,000 when the machine is installed. The firm's marginal tax rate is 34% and it uses a 12% cost of capital to evaluate projects of this nature. If the machine costs $60,000, what is the NPV of the project's cash flows?

Reference no: EM132541042

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