Question
Old Tom Morrison Golf Inc. is evaluating a new product: high compression golf balls. The ball is tentatively called the Guttie. The production line for
Old Tom Morrison Golf Inc. is evaluating a new product: high compression golf balls. The ball is tentatively called the "Guttie." The production line for the Guttie would be set up in an unused section of Morrisons main plant. The machinery will cost $240,000. Morrisons inventories would have to be increased by $30,000 to handle the new line. The project is expected to last 2 years with estimated EBITDA of $220,000 in each year. The machinery has an expected salvage value of $40,000 at the end of two years. Robertsons tax rate is 30%. What are the terminal year cash flows? (Assume that depreciation is not tax deductible.) Round your answers to the nearest dollar.
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