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Your employer is reviewing the acquisition of a new machine

Question: Your employer is reviewing the acquisition of a new machine. It will cost 2,000,000 and is depreciable for seven years with a scrap value of 300,000. The machine will cause sales to increase by 700,000 per year. Cost of Goods sold will be 40% of sales and SG&A will be 50,000 per year. The tax rate is 40%. Should it make the investment and why or why not?

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Finance Basics: Your employer is reviewing the acquisition of a new machine

Reference No:- TGS02764922

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