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Ilana Industries, Inc., needs a new lathe.




14) Ilana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1 million. The lathe will cost $35,000 to run, will save the firm $125,000 in labor costs, and will be useful for 10 years. Suppose that for tax purposes, the lathe will be depreciated on a straight-line basis over its 10-year life to a salvage value of $100,000. The actual market value of the lathe at that time also will be $100,000. The discount rate is 10 percent and the corporate tax rate is 35 percent. What is the NPV of buying the new lathe;Additional Requirements;Level of Detail: Show all work


Paper#29907 | Written in 18-Jul-2015

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