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You are evaluating a proposed acquisition of a new machine costing $ 5 0 , 0 0 0 . While the machine is expected to

You are evaluating a proposed acquisition of a new machine costing $50,000. While the machine is expected to last for 5 years, it falls into the MACRS 3-year class. Purchase of the machine would require an increase of net operating working capital of $2,000. The machine would increase the firm's revenue by $16,000 per year and its operating costs by $8,000 per year. The firm's marginal tax rate is 22 percent, and the project's cost of capital is 14 percent. What is the operating cash flow in Year 3? MACRS 3-year schedule is as follows: 33%,45%,15%, and 7% for years 1 to 4, respectively.
Question 11 options:
$7,150
$7,460
$7,620
$7,890
$8,090
$8,270

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