{"id":178702,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/truck-co-is-considering-the-purchase-of-a-new-production-machine-for-200000-the-purchase-of-this-machine-will-result-in-an-increase-in-earnings"},"modified":"2018-10-24T09:12:44","modified_gmt":"2018-10-24T09:12:44","slug":"truck-co-is-considering-the-purchase-of-a-new-production-machine-for-200000-the-purchase-of-this-machine-will-result-in-an-increase-in-earnings","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/truck-co-is-considering-the-purchase-of-a-new-production-machine-for-200000-the-purchase-of-this-machine-will-result-in-an-increase-in-earnings\/","title":{"rendered":"Truck Co. Is considering the purchase of a new production machine for $200,000. The purchase of this machine will result in an increase in earnings"},"content":{"rendered":"<p>Truck Co. Is considering the purchase of a new production machine for $200,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $55,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $5,000 after tax. In addition, it would cost $5,000 after tax to install this machine properly. Also, because this machine has an expected life<br \/> of 10 years, after which it will have no salvage value. Finally, to purchase the new machine appears that the firm would have to borrow $100,000 at 8% interest at the local bank, resulting in additional interest payments of $8,000 per year. Assume simplified straight- line depreciation and that this machine is being depreciated down to zero, a 34% marginal tax rate, and a required rate of return of 10%.<br \/> a. What is the initial outlay associated with this project?<br \/> Machine Cost<br \/> Training<br \/> Installation<br \/> ICF<br \/> b. What are the annual after-tax cash flows associated with this project, for years 1 through 9?<br \/> EBIT<br \/> Taxes<br \/> EAT<br \/> Add back Dep Exp<br \/> ATCF<br \/> c. What is the terminal cash flow in year 10?<\/p>\n<p>d. What is the NPV, PI, and IRR?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Truck Co. Is considering the purchase of a new production machine for $200,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $55,000 per year. To operate this machine properly, workers would <a href=\"https:\/\/www.benedictsol.com\/blogs\/truck-co-is-considering-the-purchase-of-a-new-production-machine-for-200000-the-purchase-of-this-machine-will-result-in-an-increase-in-earnings\/\" class=\"read-more\">Read More &#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-178702","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/178702","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=178702"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/178702\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=178702"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=178702"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=178702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}