(3) Dongfang Company is considering purchasing a new production line. The estimated initial investment is...
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(3) Dongfang Company is considering purchasing a new production line. The estimated initial investment is 30 million yuan, and it is expected to generate 5 million yuan of pre-tax profit (according to the tax law, the production line should be depreciated using a 5-year straight-line method, with net residual value The rate is 10%, the accounting policy is the same), and the net present value method has been used to evaluate the feasibility of the plan. However, the board of directors launched a fierce debate about whether the production line can be used for five years. The chairman thinks that the production line can only be used for 4 years, the general manager thinks it can be used for 5 years, and some people say that it is common for similar production lines to be used for 6 years. Assuming that the income tax rate is 25%, the cost of capital is 10%, and the net residual value income is 3 million yuan regardless of when it is scrapped. They ask you to comment on the following questions: What is the shortest possible service life of the project (assuming that the service life and the net present value are linear, and the calculation result is solved by interpolation to keep two decimal places)? Does their argument make sense (does it affect the purchase decision of the production line)? why?
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