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Chapter 08 Inclass quiz

Chapter 08 Inclass quiz - In addition the machine will be...

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Acc 200P Name: ________________________ Lab Section #_________________ Chapter 8 Present Value of an Annuity (n) period 8 % 6 4.6229 Present Value of a Lump Sum (n) period 8 % 6 0.6302 A. Needham Inc. is evaluating the purchase of a new machine with a cost of $20,000. The estimated annual cost flows are $6,000 for each of the next six years. The machine is expected to have a salvage value of $2,000 at the end of the sixth year.
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Unformatted text preview: In addition, the machine will be depreciated annually over a six year life. What is the machine’s net present value if the cost of capital is 8%? Ignore tax effects. Answer: ________________ B. What if the company has a tax rate of 25%. Taking into account income taxes, calculate the new net present value. Answer: ________________...
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