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You can buy a new lathe for $1 million. The lathe will cost $35,000 a year to run and will save the firm $125,000 in

You can buy a new lathe for $1 million. The lathe will cost $35,000 a year to run and will save the firm $125,000 in labor costs; useful life of 10 years. The lathe will be depreciated on a straight line basis over its 10 year life to a salvage value of $100,000. Actual market value of lathe will be $100,000. The discount rate will be 8%, corporate tax is 35%. What is the projected annual operating cash flow for the proposed new lathe? A. 52,650 B. 90,000 c. 81,000 d. 125,000

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