An Engineering Company Just Bought a Bending Machine for $50

question 47

Essay

An engineering company just bought a bending machine for $50 000. Its service life is 10 years, and afterwards its salvage value will be $2 000. Services provided by the machine are expected to bring
$10 000 in annual revenues, and operating costs are estimated at $2 000 per year. Assume that the CCA rate is equal to the depreciation rate, the after-tax interest rate is 5% and the corporate tax rate is 30%. Calculate the present worth of this investment.

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Definitions:

Competitive Forces

External pressures that affect an organization's ability to compete in the market, often analyzed through models like Porter’s Five Forces.

U.S. Postal Service

A federal agency responsible for providing postal service in the United States, delivering mail and packages to residences and businesses.

UPS And FedEx

UPS and FedEx are two of the largest and most well-known global courier and package delivery service companies, operating extensive networks for shipping goods.

Oligopoly

A market structure dominated by a small number of large firms, leading to limited competition.