The Columbian Coffee Company is planning on purchasing a special coffee grinding machine that costs $30,000 and is in a CCA class with a 20% rate. The company has decided to use its traditional real rate of return of 10 percent as the required rate of return. It is anticipated the equipment will generate net savings in nominal before-tax dollars as follows: The anticipated salvage value of the equipment at the end of three years is $5,000 and is not taxable. The income tax rate of Columbian Coffee is 40 percent.
What is the after-tax net present value of the investment?

Question

The Columbian Coffee Company is planning on purchasing a special coffee grinding machine that costs $30,000 and is in a CCA class with a 20% rate. The company has decided to use its traditional real rate of return of 10 percent as the required rate of return. It is anticipated the equipment will generate net savings in nominal before-tax dollars as follows:  The anticipated salvage value of the equipment at the end of three years is $5,000 and is not taxable. The income tax rate of Columbian Coffee is 40 percent.
What is the after-tax net present value of the investment?

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The Answer of The Columbian Coffee Company is planning on purchasing a special coffee grinding machine that costs $30,000 and is in a CCA class with a 20% rate. The company has decided to use its traditional real rate of return of 10 percent as the required rate of return. It is anticipated the equipment will generate net savings in nominal before-tax dollars as follows:  The anticipated salvage value of the equipment at the end of three years is $5,000 and is not taxable. The income tax rate of Columbian Coffee is 40 percent.
What is the after-tax net present value of the investment?

The Columbian Coffee Company Is Planning on Purchasing a Special