Question
Using the information contained in Exhibit 10 below, what the incremental operating cash flow in Year 1Note a MACRS table is required. Exhibit 10-1: You
Using the information contained in Exhibit 10 below, what the incremental operating cash flow in Year 1Note a MACRS table is required.
Exhibit 10-1: You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The truck's basic price is $54,000and it will cost another $10,000 to modify it for special use by your firm. The truck falls into the MACRS three-year class, and it will be sold after three years for $18,000. Use of the truck will require an increase in net working capital (spare parts inventory) of $1,500 . The truck will have no effect on revenues , but it is expected to save the firm $18,000 per year in before -tax operating costs , mainly labor. The firm's marginal tax rate is 34 percent .
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