What level of pretax operating profit

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Reference no: EM13970897

Sara Inc is considering a five-year project to improve its production efficiency. The new machine has an initial investment of $480,000. The salvage value at the end of the project will be $80,961. The machine also requires an initial investment in spare parts inventory of $35,000. If Sara’s tax rate is 35% and its discount rate is 12%, what level of pretax operating profit do we require for this project to be profitable?

Reference no: EM13970897

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