Johnson Products is considering purchasing a new milling machine that costs $120,000. The machine’s installation and shipping costs will total $4,500. If accepted, the milling machine project will require an initial net working capital investment of $20,000. Johnson plans to depreciate the machine on a straight-line basis over a period of 8 years. About a year ago, Johnson paid $12,000 to a consulting firm to conduct a feasibility study of the new milling machine. Johnson’s marginal tax rate is 40 percent.
Calculate the project’s net investment (NINV). Round your answer to the nearest dollar.
$
Calculate the annual straight-line depreciation for the project. Round your answer to the nearest cent.
$
Calculate MACRS depreciation assuming this is a 7-year class asset. Use Table 9A-3 to answer the question. Round your answers to the nearest dollar.
Year | Depreciation |
1 | $ |
2 | $ |
3 | $ |
4 | $ |
5 | $ |
6 | $ |
7 | $ |
8 | $ |
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Johnson Products is considering purchasing a new milling machine that costs $120,000. The machine’s installation and...
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