Question

Purchase price of a new machine is $84000 and the useful life of the machine is...

Purchase price of a new machine is $84000 and the useful life of the machine is 6 years. At the end of 6 years, salvage value of machine is zero. Before tax earning from the new machine is $ 23000. The effective income tax rate is %40 and the after tax MARR %12. Using SL depreciation method, show the before tax and after tax cash flow in a table. ( Including depreciation, taxable income and tax payments for each year) and calculate after tax IRR value for this investment. Is this a good investment ?

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Answer #1

No this is not a good investment as IRR is less than MARR

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