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Mars IncIs Considering the Purchase of a New Machine Which Will

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Mars Inc.is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually.Mars will use the MACRS accelerated method to depreciate the machine,and it expects to sell the machine at the end of its 5-year operating life for $10,000.The firm expects to be able to reduce net working capital by $15,000 when the machine is installed,but required working capital will return to the original level when the machine is sold after 5 years.Mars' marginal tax rate is 40 percent,and it uses a 12 percent required rate of return to evaluate projects of this nature.If the machine costs $60,000,what is the NPV of the project?


Definitions:

Sensory Stimulus

Any object or event that is input to the senses, leading to a response or recognition from the body or brain.

Reflex

An automatic, involuntary response to a stimulus without the involvement of conscious thought.

Action Potential

A temporary reversal of an electrical charge across the membrane of a nerve cell that results in the transmission of an electrical impulse.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, which acts as the processing center for nervous functions.

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