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Thornley Machines is considering a 3 year project with an initial cost of $630000 The project will not directly produce any sales but will reduce operating costs by $315000 a year The equipment is

Thornley Machines is considering a 3-year project with an initial cost of $630,000. The project will not directly produce any sales but will reduce operating costs by $315,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $69,000. The tax rate is 34 percent. The project will require $15,000 in extra inventory for spare parts and accessories. Should this project be implemented if Thornley's requires a rate of return of 11 percent? Why or why not?

May 20 2020 View more View Less

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