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The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.
The cane manufacturing machine will result in sales of 2000 canes in year 1.Sales are estimated to grow by 10% per year each year through year three.The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.The canes have a manufacturing cost of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash,4% of its annual sales in accounts receivable,9% of its annual sales in inventory,and 6% of its annual sales in accounts payable.The firm is in the 21% tax bracket,and has a cost of capital of 10%.
-The depreciation tax shield for the Sisyphean Corporation's project in the first year is closest to:
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A steroid hormone primarily secreted in the testicles of males and the ovaries of females, responsible for the development of male secondary sexual characteristics.
Estrogen
A group of hormones that play a crucial role in the development and regulation of the female reproductive system and secondary sex characteristics.
Prolactin
A hormone produced by the pituitary gland that plays an essential role in lactation, stimulating milk production after childbirth.
Vaginal Insertion
The act of placing an object or substance into the vagina for medical, sexual, or other purposes.
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