Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $50,000. The truck

image text in transcribed
image text in transcribed
You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $50,000. The truck falle into the MACRS three-year class, and it will be sold after three years for $5,000. Use of the truck will require an increase in NWC (spare parts Inventory) of $2,000. The truck will have no effect on revenues, but it is expected to save the firm $25,000 per year in before tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the operating cash flow for this project be during year 2? Which of the following measures the operating cash flow a project produces minus the necessary investment in operating capital, and is as valid for proposed new projects as it is for the firm's current operations? You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $50,000. The truck falle into the MACRS three-year class, and it will be sold after three years for $5,000. Use of the truck will require an increase in NWC (spare parts Inventory) of $2,000. The truck will have no effect on revenues, but it is expected to save the firm $25,000 per year in before tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the operating cash flow for this project be during year 2? Which of the following measures the operating cash flow a project produces minus the necessary investment in operating capital, and is as valid for proposed new projects as it is for the firm's current operations

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes

11th edition

9781259278617, 77861647, 1259278611, 978-0077861643

More Books

Students also viewed these Finance questions

Question

3. What do you fnd most challenging working with social media?

Answered: 1 week ago