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A small excavation company is investigating the possibility of purchasing a new earth mover machine. The vehicle costs $90,000, and an additional $10,000 is needed

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A small excavation company is investigating the possibility of purchasing a new earth mover machine. The vehicle costs $90,000, and an additional $10,000 is needed to modify it for special use by the firm. The company will also need an extra $2000 in net working capital for parts inventory. If the company purchases the earth mover, they will be able to save $30,000 per year (before taxes) - mostly in labor costs. The company accountant plans to depreciate the vehicle using the straight-line method over its 5 -year expected life. The salvage value (and expected sale price) at that time is $25,000. The firm's tax rate is 40% and its required rate of return is 10%. Calculate the total cash flow associated with the terminal activities of the project. $23,000$25,000$27,000$37,000 None of the above

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