8. (5 points) On 01-01-15, G purchased a machine for$15,000,000. Installation costs incurred and…

8. (5 points) On 01-01-15, G purchased a machine for$15,000,000. Installation costs incurred and paid for on 01-01-15were $10,000. G started using the machine on 01-01-15. G estimatesit will use the machine for 5 years. At the end of the 5th year, Gwill have to dispose of the machine at an estimated cost of$1,250,000. Assume as of 01-01-15 the interest rate on US Treasurysecurities was 0.75% and G’s credit standing required a 2.25% riskpremium. G uses a sum-of-the years digits depreciation method andassumes no salvage value.

 

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