Builtrite is considering the purchase of a new five-year mac…

Written by Anonymous on August 11, 2026 in Uncategorized with no comments.

Questions

Builtrite is cоnsidering the purchаse оf а new five-yeаr machine wоrth $90,000. It will cost another $10,000 to install the machine and Builtrite will need to keep an extra $4,000 in inventory on hand due to the machine’s efficiency.  The current machine being used is 5 years old and originally cost $60,000 and is being depreciated down to zero over a 10-year period.  If the current machine were sold today, it could be sold for $45,000.  In five years, the new machine is estimated to have a salvage value of $40,000.  Two employees will need to be trained for the new machine at a cost of $4000.  The new machine is expected to produce $80,000 in annual savings.  Builtrite is in the 34% tax bracket. What is the terminal cash flow for the new machine?

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