Question
29. You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $130,000. The truck
29. You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $130,000. The truck falls into the MACRS 10-year class, and it will be sold after 10 years for $13,000. Use of the truck will require an increase in NWC (spare parts inventory) of $4,300. The truck will have no effect on revenues, but it is expected to save the firm $53,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent. What will the cash flows for this project be during year 2? $41,160 $48,700 $55,200 $29,600
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started