At the end of 2010,Bezdek Corporation is planning to buy a new machine for $70,000 The new machine has a useful life of 7 years and is expected to have a salvage value of $5,000.The pretax cash flow and the depreciation for tax purposes are described below.Bezdek's tax rate is 30 percent and its cost of capital is 15 percent.
Required:
(A.)Calculate the net present value for the new machine.
(B.)Should Bezdek but the new machine?

Question

At the end of 2010,Bezdek Corporation is planning to buy a new machine for $70,000 The new machine has a useful life of 7 years and is expected to have a salvage value of $5,000.The pretax cash flow and the depreciation for tax purposes are described below.Bezdek's tax rate is 30 percent and its cost of capital is 15 percent.
  Required:
(A.)Calculate the net present value for the new machine.
(B.)Should Bezdek but the new machine?

Quizplus · Accepted Answer

The Answer of At the end of 2010,Bezdek Corporation is planning to buy a new machine for $70,000 The new machine has a useful life of 7 years and is expected to have a salvage value of $5,000.The pretax cash flow and the depreciation for tax purposes are described below.Bezdek's tax rate is 30 percent and its cost of capital is 15 percent.
  Required:
(A.)Calculate the net present value for the new machine.
(B.)Should Bezdek but the new machine?

At the End of 2010,Bezdek Corporation Is Planning to Buy