Question
ABC will purchase a machine that will cost $575000. Required instalations will cost $20000. ABC will need o invest $90000 for additional inventory. The machine
ABC will purchase a machine that will cost $575000. Required instalations will cost $20000. ABC will need o invest $90000 for additional inventory. The machine has an IRS approved useful life of 5 years. Is is presumed to have no salvage value and will be equally depreciated over its useful life. The machine is expected to increase ABCs sales revenue by $650000 per year; case operating costs are estimated at $112600 per year. Assume that the firms tax rate is 40%. What is the annual operating cash flow?
A- Cannot be determined form infomatioin given
B- $1029812
C- $370040
D- $322440
E- $537400
None of the above___________( fill in the blank).
Please guide me through this problem. Thank you
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