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Business, 28.11.2019 05:31 KillerSteamcar

You are considering the purchase of a new machine for a project. details of this potential purchase are provided below.
-the project life is 3 years.
the machine costs $151,000.
* you will pay cash for half of this machine immediately, and will borrow the remaining half at 8.3% annual rate compounded annually over 3 years.
* the machine will be depreciated using a seven year macrs approach.
annual o& m costs (expenses) of the machine are $19,000.
annual labor savings (revenues) are $107,000.
salvage value at the end of year 3 will be $53,500.
working capital requirement is initially $33,000. any investment in working capital will be recovered at the end of the project.
assume an income tax rate and gains tax rate of 38%.
find the npw of this project based on a marr of 16.9%

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