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Unformatted text preview: is being depreciated straight line to a zero book value over the next two years. If Beckingham Beads doesnt expand overseas, this old machine will do an adequate job for 5 more years and then could be sold for $25,000. The new, higher-capacity machine will cost $750,000. Additionally, Beckingham Beads will pay a sales tax of 7.5% and delivery and installation fee of $44,000. The new machine will be depreciated on a straight-line basis over 5 years to its estimated salvage value of $75,000. If sales increase, Beckingham Beads will need to invest $28,000 in working capital which will be fully recovered at the end of the 5 year project. Beckingham Beads has a 15% cost of capital and a corporate tax rate of 32%....
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- Fall '11