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A firm is considering the acquisition of a new machine. The base price is $85,000 and it would cost $15,000 to install. The machine is
A firm is considering the acquisition of a new machine. The base price is $85,000 and it would cost $15,000 to install. The machine is MACRS 3 year class property and it will be sold after 3 years for $17,000. The machine would also require an increase in net working capital of $10,000. The machine is expected to increase before tax revenues by $40,000 per year. This form is in a 34% marginal tax bracket. MACRS 3 year factors are 33%, 45%, 15%, and 7% for years 1 through 4 respectively. What is the initial (year O) net cash outflow. a 100,000 95,000 110,000 25,000
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