Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The company spent $5,000 on a study that research the various models of equipment and the company decided on the model that will have an

The company spent $5,000 on a study that research the various models of equipment and the company decided on the model that will have an installed cost of $360,000. The equipment will be depreciated straight line to zero over its five year life at the end of which parts of the equipment can be sold for $35,000, The equipment will save the firm $80,00 per year in pretax operating costs and the system requires an initial investment in net working capital of $14,500. Assume a tax rate is 35% and the relevant discount cate is 12%. what is the amount of OCF? and What is the annual deprecation ?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Risk Management And Financial Institutions

Authors: John C. Hull

3rd Edition

1118269039, 9781118269039

More Books

Students also viewed these Finance questions