Probability 40% 30% 30% Life (years) 4 5 6 The above probility distribution table is for A Corporation that is planning to buy a machine for $80,000. The machine will be depreciated straight line over 5-years with no resale value. Estimate Per annum Operating Profits is $20,000, The company is taxed at 30% and the applicable cost of capital is 12%. Should the company buy the machine? O a. $13,149, reject O b. $13,149, approve О с. $13,149, reject O d. $13,149, approve

Probability 40% 30% 30% Life (years) 4 5 6 The above probility distribution table is for A Corporation that is planning to buy a machine for $80,000. The machine will be depreciated straight line over 5-years with no resale value. Estimate Per annum Operating Profits is $20,000, The company is taxed at 30% and the applicable cost of capital is 12%. Should the company buy the machine? O a. $13,149, reject O b. $13,149, approve О с. $13,149, reject O d. $13,149, approve

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 5PROB

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