Shrieves Casting Company is considering adding a new line to itsproduct mix and

Shrieves Casting Company is considering adding a new line to itsproduct mix and the capital budgeting analysis is being conductedby Sidney Johnson a recently graduated MBA. The productionline would be set up in unused space in Shrievess mainplant. The machinerys invoice price would be approximately$200000 another $10000 in shipping charges would be requiredand it would cost an additional $30000 to install theequipment. The machinery has an economic life of 4 years andShrieves has obtained a special tax ruling that places theequipment in the MACRS 3-year class. The machinery is expected tohave a salvage value of $25000 after 4 years of use.