30.

As a new hire at Boundary Bay Corp., you are tasked with evaluating whether the firm should replace a 8-year old equipment. As you have learned from FIN341 at Western, analysis of a replacement type of project is better done by first assuming the replacement decision is made. So, assume that the firm will be replacing this old equipment, what cash flows do you think are valid and relevant in the initial period?

I. Sales price of the old machine alone

II. Potential cost savings from using the new machine

III. The opportunity cost of losing the depreciation benefit from the old machine

IV. After-tax salvage value from selling the old machine

V. Purchase cost of a new machine alone

Group of answer choices

I, II and III

III, IV and V

IV and V

III and V

II, III, IV and V

31.

In this fiscal year, Langley Inc. has sales of $409,000, depreciation of $30,000, and net working capital of $46,000. The firm has a flat tax rate of 21% and a profit margin of 6%. The firm has no interest expense. What is the amount of the operating cash flow in this year?

Group of answer choices

$58,340

$54,980

$69,930

$299,410

$54,540

32.

Skagit Inc. is in the last year of a 5-year project. The firm previously acquired $120,000 worth of fixed assets for the project and these fixed assets were depreciated using a straight-line method to a zero book value over five years. Currently, these fixed assets can be sold in the market for 25 percent of their original cost. In addition, this project has also generated annual sales of $434,000 with a relevant cost of $330,000 in every year of the project. The firm's current tax rate is 21 percent with a cost of capital of 10 percent. What is the amount of the after-tax cash flow from the sale of the fixed assets? (Round your answer to whole dollars)

Group of answer choices

$21,840

$9,480

$23,730

$16,250