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Warner Roberts Company is considering the purchase of a new machine costing $325,000. This machine is estimated to cost $12,000 per year in operating expenses but it will allow the company to earn an additional $68,000 per year in revenues. The machine will be depreciated using the straight-line method over its 10 year life. There is no expected salvage value at the end of its life. If the required rate of return is 8%, and the income tax rate is 28%, what is the net present value of this project?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M949111

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