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(Solved): Q3Q company is considering an investment (at time = 0) in a machine that produces lamps. The cost of ...



Q3Q company is considering an investment (at time = 0) in a machine that produces lamps. The cost of the machine is 88,208 dollars with zero expected salvage value. Annual production in units during the 3-year life of the machine is expected to be (starting at time = 1) 8,822, 9,427, and 9,255. The lamps sale price per unit is 13 dollars in year one and it is expected to increase by 10% per year thereafter. Production costs per unit will be 6 dollars in year one, and then increase by 5% per year. Depreciation on the machine is fixed at 14,531 dollars per year, and the overall tax rate is 40%. Calculate the net cash flow at time = 2 (not present value). Assume all flows are at the end of each year.



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