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Leumax Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $185,000. Its market value at the end of five years

Leumax Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $185,000. Its market value at the end of five years is estimated as $40,000. The accounting department uses the straight line method to depreciate the equipment. The justification for this machine include $40,000 savings per year in labor and $30,000 savings per year in reduced material. The before-tax MARR is 50%. Use this information to solve questions a and b.

a.The taxable income for year three is most nearly:

b.The total before-tax cash flow in year five is most nearly:

c. PW of ATCF A$

image text in transcribed

EOYTkTRSTInnaaknTBTCF_ depreciation! Taxable TAKTI ATCF TPVMmarl EOYIk] | R$ | (1+1)4k | A$- depreciation | Taxable | TAX= | A$ | PWIman] Inflacion | BTCF Income I-40"TIATCFI E 01233

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