An injection molding machine can be purchased and installed for
$110,000.
It is in the seven-year GDS property class and is expected to be kept in service for eight years. It is believed that
$11,000
can be obtained when the machine is disposed of at the end of year eight. The net annual value added (i.e., revenues less expenses) that can be attributed to this machine is constant over eight years and amounts to
$15,000.
An effective income tax rate of
21%
is used by the company, and the after-tax MARR equals
15%
per year.