3 4,400 16,000
Flatte Restaurant is considering the purchase of a $ 10,200 soufflé maker . The soufflé maker has an economic life of five years and will be fully depreciated by the straightline method . The machine will produce 2,100 soufflés per year , with each costing $ 2.50 to make and priced at $ 5.20 . Assume that the discount rate is 12 percent and the tax rate is 35 percent .
The Best Manufacturing Company is considering a new investment . Financial projections for the investment are tabulated here . The corporate tax rate is 40 percent . Assume all sales revenue is received in cash , all operating costs and income taxes are paid in cash , and all cash flows occur at the end of the year . All net working capital is recovered at the end of the project .