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Some new production machinery has a first cost of $150,000. It's useful life is 10 years. It's estimated operating and maintenance costs are $20,000 and will increase by $3,000 each year. The before-tax market value will be $75,000 at the end of the first year then will decrease by $5,000 annually. This property is a 7 year MACRS property. The company uses a MARR of 7% and the marginal tax rate is 40%.

Calculate the after tax cash flows and the minimum cost life.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92680008

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