You are evaluating the proposed acquisition of a new machine costing $$59,000,$ and it falls into the MACRS $3-$year class. Purchase of the machine would require an increase of net operating working capital of $$3,000,$ which will be recovered when the machine is sold. The machine would increase the firm's revenues by $$26,000$ per year and its operating costs by $$11,000$ per year. The machine is expected to be used only for $3$ years and then be sold for $$22,000.$ The firm's marginal tax rate is $24$ percent, and the project's cost of capital is $14$ percent. What is the net cash flow at t$=0,$ i$.$e$.,$ the initial cash flow?

Question $9$ options:

$$52,000$

$$54,000$

$$56,000$

$$58,000$

$$62,000$

$$67,000$

Question $10(2$ points$)$

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The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $$70,000,$ and it falls into the MACRS $3-$year class. Purchase of the computer would require an increase in net operating working capital of $$2,000.$ The computer would increase the firm's before$-$tax revenues by $$30,000$ per year but would also increase operating costs by $$14,000$ per year. The computer is expected to be used for $3$ years and then be sold for $$25,000.$ The firm's marginal tax rate is $40$ percent, and the project's cost of capital is $14$ percent.

What is the operating cash flow in Year $2?$ Round it to a whole dollar, and do not include the $ sign.

Year

MACRS Percent

$1$

$0\mathrm{.}33$

$2$

$0\mathrm{.}45$

$3$

$0\mathrm{.}15$

$4$

$0\mathrm{.}07$

Your Answer: