Mac Products Inc. is considering the purchase of a new machine. The estimated cost of the machine is $30,000. The machine is expected to generate annual cash inflows over the next three years as follows: The machine will be depreciated with no half-year convention over its three-year life using the straight-line method and is not expected to have a residual value at the end of its useful life. The company considers income tax effects in all of its capital investment decisions. If the company's income tax rate is 35% and they desire an after-tax return of 14% on investments, the net present value of the new machine is:

Question

Mac Products Inc. is considering the purchase of a new machine. The estimated cost of the machine is $30,000. The machine is expected to generate annual cash inflows over the next three years as follows:  The machine will be depreciated with no half-year convention over its three-year life using the straight-line method and is not expected to have a residual value at the end of its useful life. The company considers income tax effects in all of its capital investment decisions. If the company's income tax rate is 35% and they desire an after-tax return of 14% on investments, the net present value of the new machine is:

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The Answer of Mac Products Inc. is considering the purchase of a new machine. The estimated cost of the machine is $30,000. The machine is expected to generate annual cash inflows over the next three years as follows:  The machine will be depreciated with no half-year convention over its three-year life using the straight-line method and is not expected to have a residual value at the end of its useful life. The company considers income tax effects in all of its capital investment decisions. If the company's income tax rate is 35% and they desire an after-tax return of 14% on investments, the net present value of the new machine is: