The machine jubilee corporation is considering for purchase has an estimated useful life of 5 years. If the new machine is purchased, pretax cash flows are estimated as follows:
Pretax cash inflows Pretax cash outflows
Year 1 $40,500 $18,000
Year 2 50,400 27,000
Year 3 44,100 22,500
Year 4 40,500 20,700
Year 5 37,200 18,000
Required:
Jubilee's cost of capital is 10% and its tax rate is 21%. Calculate the after-tax net present value of the estimated cash flows.
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