You must evaluate a proposal to buy a machine the cost of, Financial Management

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You must evaluate a proposal to buy a machine the cost of

You must evaluate a proposal to buy a machine. The cost of the machine including shipping, modification and installation costs is 100,000. The machine will be depreciated using MACRS 3 year class life 33%, 45%,,15%7%) sold after 3 years for 12,000. The firm has 10 years bonds outstanding selling for 1200. The coupon rate on the bond is 12% and par value is $10000. The beta of the firm's common stock is 1.5. Risk free rate is 7%.

What is the tax shield?

What are the cash flows for Yr 1-3?

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Financial Management: You must evaluate a proposal to buy a machine the cost of

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