Question
Metal XYZ Inc. is considering a new project involving a purchase of a new smelting machine. The machine can be purchased for $906,000, and it
Metal XYZ Inc. is considering a new project involving a purchase of a new smelting machine. The machine can be purchased for $906,000, and it is expected to last 10 years and then be sold for $248,000. The company uses straight-line depreciation. Metal XYZ anticipates its annual operating revenue will increase by $944,000, and its annual operating expenses will increase by $291,000 as a result of acquiring the machine. Assuming the company is facing an effective tax rate of 32%, calculate the after-tax cash flow (CFAT) for year 3 of the project.
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