ABC Manufacturing is subject to a 50 percent tax rate and 12 percent required hurdle rate. Management is considering purchasing new machine that is expected to cost 200,000 and produce savings of 60,000 a year. The machine has 10 year life span and zero residual value. Straight line depreciation will be used.
What will be a relevant cash flow for this problem... I somehow can't findy any relevance of the tax rate for this problem. Any suggestions will be appreciated.
Eugene