Consider the following for questions 4448:

A new product is being considered by Stanton Corp. An

outlay of $40,000 is required for equipment and an

additional net working capital investment of $1000 is

required. The project is expected to have a 4 year life

and the equipment will be depreciated on a straight line

basis (equal annual amount) to a $4,000 book value.

Producing the new product will reduce current

manufacturing expenses by $5,000 annually and

increase earnings (revenue) before depreciation and

taxes by $6,000 annually. Stanton's marginal tax rate is

40 percent. Stanton expects the equipment will have a

market salvage value of $10,000 at the end of 4 years.

Question: Regardless of your answer to number 45

above, ASSUME DEPRECIATION = $8,000 per year.

What is the project's aftertax

operating cash flow during

years 14

from the machine?

11,000

3,000

6,600

14,600

9,800