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question 78

Essay

Use the information for the question(s)below.
Kinston Industries is considering investing in a machine that will cost $125,000 and will last for three years.The machine will generate revenues of $120,000 each year and the cost of goods sold will be 50% of sales.At the end of year three the machine will be sold for $15,000.The appropriate cost of capital is 10% and Kinston is in the 21% tax bracket.
-Assume that Kinston's new machine will be depreciated straight line to a salvage value of $5,000 at the end of year three.What is the NPV for this project?

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Definitions:

New Netherland

A 17th-century colonial province of the Dutch Republic that included parts of what is now the northeastern United States.

Amicable Relations

Friendly and cordial interactions or agreements between individuals, groups, or nations, often aimed at fostering peace and cooperation.

Pequot War

A conflict between the Pequot tribe and settlers from the Massachusetts Bay, Plymouth, and Saybrook colonies along with their Native American allies in 1636-1637.

English Colonists

Early settlers from England who established colonies in what would become the United States during the 16th and 17th centuries.