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Use the following information to answer the following question(s). Delta Inc. is considering the purchase of a new machine which is expected to increase sales
Use the following information to answer the following question(s). Delta Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. Due to the sales increase, Delta will need to increase working capital by $1,000 at the beginning of the project. Delta will depreciate the machine using the straight-line method over the project's five year life to a salvage value of zero. The machine's purchase price is $20,000. The firm has a marginal tax rate of 34 percent, and its required rate of return is 12 percent. The machine's after-tax incremental cash flow in year five is Answers: $5,980. $8,620. $7,120. $6,980. SpaceTech is considering a new project with the following projections for Year 2. Compute the operating cash flow for year 2 . Answers: Use the following information to answer the following question(s). Delta Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. Due to the sales increase, Delta will need to increase working capital by $1,000 at the beginning of the project. Delta will depreciate the machine using the straight-line method over the project's five year life to a salvage value of zero. The machine's purchase price is $20,000. The firm has a marginal tax rate of 34 percent, and its required rate of return is 12 percent
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