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- For production over next five years, Lucas Corp considers the purchase of a set of new equipment, including: - A machine in CCA class
- For production over next five years, Lucas Corp considers the purchase of a set of new equipment, including: - A machine in CCA class A: cost is $120,000 and the depreciation rate 40%. - A machine in CCA class B: cost is $60,000 and the depreciation rate 30%. - A license: cost is $60,000, and is tax-deductible as an expense in the purchase year. - The set of equipment will generate revenues $150,000 per year and incur costs $50,000 per year. - The set of equipment will require an increase in inventories by $30,000 and : increase in account payables by $10,000 at the beginning of the project. The changes in inventories and account payables can be restored to the original level five years later. - Salvage values of the machines five years later are expected to be $20,000f the one in class A and $10,000 for the one in class B, respectively. - The cost of capital is 10% and the corporate tax rate is 35%. What is the initial cash flow (i.e., cash flow at time 0)? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. A What is the discounted cash flow in year 3 ? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. A What is the discounted cash flow in the terminal year (i.e., year 5)? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. A
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