Kinky copies may buy a high-volume copier the machine costs


Question: Kinky Copies may buy a high-volume copier. The machine costs $70,000 and will be depreciated straight. line over 5 years to a salvage value of $12.000. Kinky anticipates that the machine actually can be sold in 5 years for $22,000. The machine will save $12,000 a year in labor costs but will require an increase working capital, mainly paper supplies, of $6,000. The fram's marginal tax rate is 35%, and the discount rate is 11%. (Assume the net working capital will be recovered at the end of year 5) Calculate the NPV. Should Kinky buy the machine?

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Finance Basics: Kinky copies may buy a high-volume copier the machine costs
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