Explore BrainMass

Explore BrainMass

    Evaluate capital budgeting decision scenarios for Equity Cor

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Equity Corp. paid a consultant to study the desirability of installing some new equipment. The consultant recently submitted the following analysis.

    Cost of new machine $100,000
    Present value of after-tax revenues from operation 90,000
    Present value of after-tax operating expenses 20,000
    Present Value of depreciation expenses 87,500
    Consulting fees and expenses 750

    © BrainMass Inc. brainmass.com June 4, 2020, 2:06 am ad1c9bdddf

    Solution Preview

    To evaluate whether to purchase the new machine, you would compare the present value of the expected future cash flows, net of tax, and compare it to the cost today to obtain the machine.

    Present value of future cash ...

    Solution Summary

    Process is explained and a comment is made about the result.