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Meals on Wings Inc., which supplies prepared meals for corporate aircraft, needs to purchase new broilers. The new broilers would replace broilers purchased 10 years
Meals on Wings Inc., which supplies prepared meals for corporate aircraft, needs to purchase new broilers. The new broilers would replace broilers purchased 10 years ago for exist105,000, which are being depreciated on a straight - line basis to a zero salvage value (15 - year depreciable life). The old broilers can be sold today for exist63,000. The new broilers will cost exist202,000, installed (not counting funds already spent), and will be depreciated using straight - line depreciation over their 5-year life. They will be sold at their book value at the end of the 5th year. The firm expects to increase its revenues by exist27,000 per year if the new broilers are purchased, but cash expenses will also increase by exist3,000 per year. Annual interest expense will be exist2,000, and net working capital will increase by exist5,000. The new broilers will occupy space currently leased to another firm for exist530 per month, and exist5,000 has already been spent preparing the building for new broilers. The firm's tax rate is 40%. What are the terminal year cash flows? Round your answers to the nearest dollar. A. exist32, 442 B. exist27, 442 C. exist23, 944 D. exist28, 944 E. exist22, 744
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