Question
Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $297,313, plus installation fees of $10,403 and will generate earning before
Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $297,313, plus installation fees of $10,403 and will generate earning before interest and taxes of $77,548 per year over its 9-year life. The machine will be depreciated on a straight-line basis over its 9-year life to an estimated salvage value of 0. Mystics marginal tax rate is 0%. Mystic will require $33,726 in NWC if the machine is purchased. Determine the annual cash flow in year 3 if the machine is purchased. round your answer to two decimals.
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