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The Kevin Durant Co . is considering the purchase of some new machinery. The new machinery costs $ 1 0 0 , 0 0 0

The Kevin Durant Co. is considering the purchase of some new machinery. The new machinery costs $100,000. The machinery will be depreciated on a straight-line basis for three years and it will be sold after three years for $8,200. The machinery will require company to increase working capital by $4,800 which will be recovered at the end of the machinery's life. The machinery is not anticipated to increase revenues but it will save the company $146,400 in costs each year of the project's three year life. The company has a 10% cost of capital and has a 20% tax rate.
What is the operating cash flow for this project in year 1?
Multiple Choice
$123,787
$146,400
$55,947
$117,120
What is the intital cash outlay for this project?
Multiple Choice
-$100,000
-$33,333
-$104,800
-$95,200
What is the total cash flow of the project in its terminal year?
Multiple Choice
$123,787
$128,587
$135,147
$130,347

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