Section 8:

Larry's Lasagne Lounge is considering buying a new piece of kitchen equipment. The Year 1 EBDT resulting from the investment is projected to be $5,000. Depreciation is expected to be $2,000. The company's tax rate is 35%. Calculate the Year 1 net cash flow for this investment.

Group of answer choices

$3,000

$1,950

$5,000

$3,950

Kerry's Kettle Korn Shop is considering an investment in a new popcorn popping machine. The machine will cost $10,000. The net cost of the machine (accounting for the sale of the old one) is projected to be $5,000. Assuming the 5-year MACRS depreciation schedule (Yr1: .20; Yr2: .32; Yr3: .192; Yr4: .115; Yr5: .115; Yr6: .058), what will be the company's depreciation charge for the new machine in year 3?

Group of answer choices

$960

$1,000

$2,000

$1,920