Question

Daily Enterprises is purchasing a $8,000,000 machine. The machine will be depreciated using straight-line depreciation over its 6 year life and will have no salvage value. The machine will generate revenues of $8,000,000 per year along with costs of $3,000,000 per year. If Daily's marginal tax rate is 26%, what will be the cash flow in each of years 1 to 6 (the cash flow will be the same each year)? Enter your answer rounded to the nearest whole number. Enter your answer below. 4046666.67 Correct response: 4,046,667+1 Given annual cash flows of $4,046,667, if the discount rate is 6%, what is the NPV of the project? Enter your answer rounded to the nearest whole number Enter your answer below. Number Should Daily accept or reject the project (choose one)? Enter your answer below. Accept Reject Section Attempt 1 of 1 Verify

Answer 1

6% Amuont $ 4,046,667.00 Factor 4.9173 $ Present value 19,898,774 Operating cash flows Less: Initial investment $ 8,000,000 Net present value $ 11,898,774 Accept project, NPV > $0

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