Xyz wants to buy a new production machine for 20000, Ask an Expert

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XYZ wants to buy a new production machine for $20,000. Projected cash flows (already adjusted) from this investment will be 5,000; 4,000; 6,000; 6,000, and 6,000. The residual value of the machine is $500, and the company will receive the IRS ITC for buying the new capital equipment. The machine will require some maintenance in year 2 for $1000 and the company can borrow from its bank at Prime plus 5.75%. Is this a good investment? Regardless of your answer to this question, what is the IRR of this project?

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Financial Management, Finance

Category:- Financial Management
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