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  • File 000018

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    Nicholas Gunnell
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    The document presents a capital budget for a proposed machine with an initial investment of $137,120 and residual cash flows of $38,960 in Year 1, $53,280 in Year 2, $45,480 in Year 3, and a terminal value of $44,000. Given Builtrite's cost of capital is 15%, the machine appears to be profitable based on the positive net present value of future cash flows.

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    The document presents a capital budget for a proposed machine with an initial investment of $137,120 and residual cash flows of $38,960 in Year 1, $53,280 in Year 2, $45,480 in Year 3, and a terminal value of $44,000. Given Builtrite's cost of capital is 15%, the machine appears to be profitable based on the positive net present value of future cash flows.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
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    17 views2 pages

    File 000018

    Uploaded by

    Nicholas Gunnell
    The document presents a capital budget for a proposed machine with an initial investment of $137,120 and residual cash flows of $38,960 in Year 1, $53,280 in Year 2, $45,480 in Year 3, and a terminal value of $44,000. Given Builtrite's cost of capital is 15%, the machine appears to be profitable based on the positive net present value of future cash flows.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
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    of 2

    Given the following capital budget for a proposed machine, what would

    you recommend that Builtrite do? Builtrite’s cost of capital is 15%.

    Initial investment $137,120

    RATCF Year 1 38,960

    RATCF Year 2 53,280

    RATCF Year 3 45,480

    Terminal CF 44,000

    38,960 53,280 89,480

    137,120

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