Your firm is considering the purchase of a machine that costs $75,000. It will be used for six years, and will have zero salvage value at the end of the sixth year. The machine will save $40,000 each year in labor but will incur an additional $15,000 in operating and maintenance costs each year. The machine falls into the five-year MACRS class. The firm’s combined state and federal tax rate is 40% and its after-tax MARR is 12%. Show the cash flow in each of the six years (attach the table) and compute the NPW(MARR).
Find Year 0,1,2,3,4,5,6 and find NPW.