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A machine costs $87,500 with estimated scrap value of $12,000 after 5 years. The asset is expected to increase revenue by $27,000 a year before maintenance costs of $8,200 a year. Assuming a tax rate of 33%, compute the net present value of the investment using a 5% interest rate and depreciation charges obtained from

a. the straight line method of depreciation.

b. the sum of years digits method of depreciation.

c. the double declining balance method for two years followed by the straight line method.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92425226

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