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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

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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

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