5: Consider a $10,000 machine that will reduce pretax operating costs by $3,000 per year over...

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5: Consider a $10,000 machine that willreduce pretax operating costs by $3,000 per year over the next fiveyears. The machine will be depreciated straight-line to zero in 5years. It will not require any changes in net working capital andis expected to be worth $1,000 in five years. A tax rate is 34%.The discount rate is 10%.
Find NPV and IRR.

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Calculation of NPV Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Saving in pretax operating costs 300000 300000 300000 300000 300000 Less Depreciation 200000 200000 200000 200000 200000 Add See Answer

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5: Consider a $10,000 machine that willreduce pretax operating costs by $3,000 per year over the next fiveyears. The machine will be depreciated straight-line to zero in 5years. It will not require any changes in net working capital andis expected to be worth $1,000 in five years. A tax rate is 34%.The discount rate is 10%.Find NPV and IRR.