Question: jj enterprises is considering the purchase of a new machine...
JJ Enterprises is considering the purchase of a new machine that will produce thumb drives. The new machine will require an initial investment of $800,000 and has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 150,000 thumb drives per year with each costing $0.10 to make. Each will be sold at $2.00. Assume JJ Enterprises uses a discount rate of 14 percent and has a tax rate of 34 percent. What is the NPV of the project and should JJ Enterprises make the purchase.
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