Battaglia Corporation is considering the acquisition of a new machine. The machine can be purchased for $100,000; it will cost $4,000 to install and $7,000 to transport to their plant. It is estimated that the machine will last 10 years, and it is expected to be worth $4,000 after it's fully depreciated. Over its 10-year life, the machine is expected to produce 3,000 units per year with a selling price of $300 and combined material and labor cost of $250 per unit. Federal tax regulations permit machines of this type to be depreciated using the straight-line method over 7 years with no consideration for salvage value. Battaglia has a marginal tax rate of 30 percent. 1. What is the net cash outflow at the beginning of the first year that Battaglia Corporation should use in a capital budgeting analysis? (A) $100,000 (B) $107,000 (C) $111,000 (D) $97,500 2. How much depreciation should Battaglia consider in the calculation of after-tax cash flow in its capital budgeting analysis for Year 2? (A) $15,857 (B) $13 ,059 (C) $11,500 (D) $11,100 3. What is the net cash flow for the second year that Battaglia should use in a capital budgeting analysis? (A) $150,000 (B) $109,757 (C) $134,143 (D) $40,243 4. What is the net cash flow for Year IO of the project that should use in a capital budgeting analysis? (A) $105,000 (B) $107,800 (C) $109,800 (D) $109,000 ..............

5.

. Herbie's Auto Shop purchased an asset for $90,000 that has no salvage value and a 10-year life. Herbie's effective income tax rate is 30 percent, and it uses the straight-line depreciation method for income tax reporting purposes. For book purposes, Herbie will also depreciate this asset using the straight-line method, and there is an expected salvage value of $10,000. Herbie's annual depreciation tax shield from the asset would be

(A) $9,000

{B) $2,700

(C) $6,300

(D) $2,400

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6.

. Capell Corporation makes an investment of $250,000 with a useful life of 10 years (no salvage value) and expects to use this investment to generate $370,000 in sales with $290,000 in incremental operating costs. If the company operates in an environment with a 40 percent tax rate, what are

the expected after-tax cash flows that Capell will use to evaluate the capital investment decision?

(A) $10,000 (B) $23,000 (C) $48,000 (D) $58,000

please explain answer. Tk.