The company is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated machine which will result in reducing pre-tax costs by $200,000 for each of the next five years. The machine will cost $475,000 and the IRS says it must be depreciated as 5-year MACRS equipment. The company believes they can sell the machine for $70,000 at the end of five years. The machine will require an initial investment to increase inventory by $30,000, and then an additional inventory increase of $5,000 for each succeeding year of the project. At the end of the project, inventory will return to its normal level. The companys tax rate is 35% and uses a discount rate of 14% APR with annual compounding.

What is the cash flows from assets(free cash flow) at the beginning of the project?

nd of five years. The machine will require an initial investment to increase in project, inventory will return to its normal level. The company's tax rate is 35% a Year 1 2 3 4 5 6 5-year MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% What is the cash flow from assets (free cash flow) at the beginning of the pro $35,000 inflow $30,000 outflow $475,000 outflow $495,000 outflow $505,000 outflow A Moving to the next question prevents changes to this