Question
Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft, pliable
Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft, pliable but also bouncy. The machine will increase EBITDA by $ 270,000 per year for the next two years. Assume that operating cash flows occur at the end of each year. The machine's purchase price is $ 285,000and the salvage value at the end of two years is $ 54,150. The machine is classified as 3-year property. To run the Crazy Rubber production line the company will need to purchase an inventory of polydimethylsiloxane and boric acid for a total cost of $ 24,000.
What is the initial cash flow for the Crazy Rubber project?
The initial cash flow is ? (Round to the nearest dollar. Enter any cash outflow as a negative amount.)
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