Solved: Flatte restaurant is considering the purchase of a 10400, Finance Basics

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Flatte restaurant is considering the purchase of a 10400

Problem: Flatte Restaurant is considering the purchase of a $10,400 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 2,200 soufflés per year, with each costing $2.60 to make and priced at $5.45. Assume that the discount rate is 16 percent and the tax rate is 34 percent.

What is the NPV of the project?
Should the company make the purchase?

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Finance Basics: Flatte restaurant is considering the purchase of a 10400

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Finance Basics: Flatte restaurant is considering the purchase of a 10400

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