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The management of cooper Equipment is planning to purchase a new milling machine that will cost 160,000 installed.The old machine has been fully depreciated but can be sold for 15,000. The new machine will be depreciated on a straight-line basis over its 10 year economic life to an estimated salvage value of 10,000. If this milling machine will save Cooper 20,000 a year in production expenses, what are the annual net cash flows associated with the purchase of this machine? Assume a marginal tax rate of 40 percent.

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  1. Describe the financial statement forecasting process.

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  2. Many corporate acquisitions result in losses to the acquiring firms' stockholders. Accordingly, why do firms purchase other corporations? Are they simply paying too much for the acquired corporation? A co-worker asks your opinion. Specifically state the reasons for your argument.
    • Explain the importance of the marginal cost of capital (MCC) schedule in financial decision making.
    • Describe the financial statement forecasting process.

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