Buchanan Enterprises is considering investing in a machine that costs $400,000. The machine is expected to generate revenues of $175,000 per year for five years. The machine would be depreciated using the straight-line method with no half-year convention over five years and have no salvage value. The company considers the impact of income taxes in all of its capital investment decisions. The
company has a 40 percent income tax rate and desires an after-tax rate of return of 10 percent on its investment. The net present value of the machine is:
A) $179,992.
B) $(13,338).
C) $119,337.
D) $(1,966).
C
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