Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $991,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. The machine will produce 36,000 keyboards each year. The price of each keyboard will be $35 in the first year and will increase by 6 percent per year. The production cost per keyboard will be $14 in the first year and will increase by 7 percent per year. The project will have an annual fixed cost of $211,000 and require an immediate investment of $41,000 in net working capital. The corporate tax rate for the company is 35 percent. The appropriate discount rate is 12 percent.Calculatiun 0i Cash Flows ——————36.000 ——————5 333,253.49 930,019.335 211mm 5 211mm 211mm193,200.005 “4358-49 520,319.13182.3019:333,511.35— — mm mmmmm mmmmm…
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