A new high-speed processing unit costing $1,200,000 is being considered as a potential investment designed to increase the firm's output capacity. This piece of equipment will have an estimated usable life of 10 years and a $0 estimated salvage value. If the processing unit is bought, Taylor's annual cash revenues are expected to increase to $1,600,000, and annual cash expenses will increase to $900,000. Annual depreciation will increase to $320,000.
Compute the firm's annual net cash flows (NCF) for capital budgeting purposes for the next 10 years, assuming that the new processing unit is purchased.
This question was asked on May 05, 2010 and answered on May 05, 2010.
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