A new machine can be purchased for 1500000 it will cost...

A new machine can be purchased for $1,500,000. It will cost $45,000 to ship and $55,000 to fine-tune the machine. The new machine will replace an older version that is fully depreciated and will be sold for $125,000. The firm's income tax rate is 40%. What is the net investment cost of the machine for capital budgeting purposes? Show your work.... $1,525,000 $1,725,000 $1,600,000 $1,675,000

Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. 1. Calculate the following for the new machine: a. Net present value b. Payback period c. Discounted payback period d. Internal rate of return (using the interpolation method) e. Accrual accounting rate of return based on the net initial investment (assume straight-line depreciation) 2. What other factors should Yummy Candy consider in deciding whether to purchase the new machine?

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