Question
Swedish Medical is evaluating the purchase of a new diagnostic equipment, which costs $1,200,000, has an expected life of five years, and an estimated pretax
Swedish Medical is evaluating the purchase of a new diagnostic equipment, which costs $1,200,000, has an expected life of five years, and an estimated pretax salvage value of $400,000. It is expected to generate $600,000 in its first year of use. In the same year operating expenses without depreciation are expected to be $270,000. The hospitals tax rate is 25 percent. The equipment falls into the MACRS five-year class for tax depreciation, given in the following table:
Year | Allowance |
1 | 0.20 |
2 | 0.32 |
3 | 0.19 |
4 | 0.12 |
5 | 0.11 |
6 | 0.06 |
Estimate Swedishs Year 1 net cash flow.
Group of answer choices
a.$318,000
b.$350,450
c.$307,500
d.$67,500
$318,500
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