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DeLuxe Furniture is thinking of buying a wood cutting machine for $200,000 that would save it $40,000 per year in production costs. The savings would
DeLuxe Furniture is thinking of buying a wood cutting machine for $200,000 that would save it $40,000 per year in production costs. The savings would be constant over the project's 3-year life. The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The machine would require an additional $5,000 in net working capital. The appropriate cost of capital for this project is 10% and the company's tax rate is 35%. Part 1 Attempt 4/10 for 10 pts. What is the incremental cash flow in year 0 ? Choose the right sign. Part 2 Attempt 1/10 for 10 pts. What is the incremental cash flow in year 1 ? DeLuxe Furniture is thinking of buying a wood cutting machine for $200,000 that would save it $40,000 per year in production costs. The savings would be constant over the project's 3-year life. The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The machine would require an additional $5,000 in net working capital. The appropriate cost of capital for this project is 10% and the company's tax rate is 35%. Part 1 Attempt 4/10 for 10 pts. What is the incremental cash flow in year 0 ? Choose the right sign. Part 2 Attempt 1/10 for 10 pts. What is the incremental cash flow in year 1
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