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Cookies R Us Incorporated is evaluating a new cookie cutting machine that will cost $500,000. The...

Cookies R Us Incorporated is evaluating a new cookie cutting machine that will cost $500,000. The machine can be depreciated on a straight-line basis to zero over 10 years. It will provide the company with annual before-tax savings of $135,000. The marginal corporate tax rate is 40% and the required rate of return is 15%. What is the net present value of this cost-cutting asset?

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Answer #1

YEAR calculation (135000*0.6)+(500000/10*0.4) Cash flow -$500,000 $101,000 $101,000 $101,000 $101,000 $101,000 $101,000 $101,

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