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Calculating 'cash flows over the life' Birdseye Corporation ( BIRD ) is considering whether to replace its old chicken cutting machine with a new one
Calculating 'cash flows over the life'
Birdseye Corporation BIRD is considering whether to replace its old chicken cutting machine with a new one that costs $ immediately. Inghams Company will buy the old cutting machine today for $
The new cutting machine is able to reduce annual operating expenses by $ each year from $ BIRD will raise $ through a private placement to partly fund the machine.
Last month, BIRD paid $ in consulting fees for advising on the decision to purchase a new cutting machine.
The old cutting machine was generating sales of $ annually. The old cutting machine was incurring depreciation expenses of $ per year, and has years left until it reaches the end of its useful life.
The new cutting machine will generate yearly sales which are higher when compared to the sales generated by the old machine.
This new cutting machine has a year life for tax purposes. Assume the company tax rate is
What are the 'cash flows over the life'?
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