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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
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 $215,000 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 $260,000 and the salvage value at the end of two years is $46,800. 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 onc acid for a total cost of $15,000 The MACRS depreciation rates for the first two years are 33 33% and 44 45%, The deprecation expense n Year 1 is $86,658. The tax rate is 35%. What are the operating cash flows for the project in Year 1? Calculate the operating cash flows below: (Round to the nearest dollar.) Operating Cash Flows Revenue Operating Expenses EBITDA Depreciation Expense EBIT Taxes NOPAT Add: Depreciation Operating Cash Flows 0) $L
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