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Category > Business & Finance Posted 01 Jun 2017 My Price 11.00

The Gehr Company is considering

The Gehr Company is considering the purchase of a new machine tool to replace an obsolete one. The machine being used for the operation has both a book value and a market value of zero; it is in good working order, however, and will last physically for at least another 10 years. The proposed replacement machine will perform the operation so much more efficiently that Gehr engineers estimate it will produce after-tax cash flows (labor savings and the effect of depreciation) of $9,000 per year. The new machine will cost $40,000 delivered and installed, and its economic life is estimated to be 10 years. Its expected salvage value is zero. The firm's requited rate of return is 10 percent, and its marginal tax rate is 40 percent. Should Gehr buy the new machine?

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Status NEW Posted 01 Jun 2017 05:06 AM My Price 11.00

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