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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 falls
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 falls into the MACRS 3-year class, and it will be sold after three years for $19,400. Use of the truck will require an increase in NWC (spare parts inventory) of $1,400. The truck will have no effect on revenues, but it is expected to save the firm $17,100 per year in before-tax operating costs, mainly labor. The firms marginal tax rate is 34 percent.
What will the cash flows for this project be?
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