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USE EXCEL You are considering installing a new machine for your facility. The machine costs...

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Accounting

USE EXCEL

You are considering installing a new machine for your facility. The machine costs $220,000 and will generate additional revenues of $85,000 per year. It will also save $65,000 per year in labor and material costs. To parchase this machine, you will be getting a loan of $120,000 which is repayable in three equal annual installments with a 9% percent interest rate (i=9%). The machine will be depreciated using seven-year MACRS. The useful life of the machine is 10 years, after which it will be sold for $20,000. Note that the marginal tax rate is 40%. 1. Develop a cash flow for the problem (Find the year by year after tax cash flow for the project like we did in class) 2. Compute the IRR for this investment 3. At MARR = 18%, is this project acceptable/justifiable?

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