Question
You work for a company that is evaluating equipment that would increase operational efficiencies but would not increase revenue. The equipment costs $800,000 and should
You work for a company that is evaluating equipment that would increase operational efficiencies but would not increase revenue. The equipment costs $800,000 and should reduce annual operating costs by $280,000 over its life. Your firm will use straight-line depreciation over the 3-year life to a $0 book value. The equipment will require the firm to hold an extra $25,000 of inventory over the 3-year period. Assume the firm sells the equipment for $30,000 at the end of the 3-year period. The discount rate is 12 percent, and the tax rate is 21 percent. What will be the after-tax cash flow from the sale of the equipment at the end of the project?
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Unanswered Question 20 0 / 5 pts You work for a company that is evaluating equipment that would increase operational efficiencies but would not increase revenue. The equipment costs $800,000 and should reduce annual operating costs by $280,000 over its life. Your firm will use straight-line depreciation over the 3-year life to a $0 book value. The equipment will require the firm to hold an extra $25,000 of inventory over the 3-year period. Assume the firm sells the equipment for $30,000 at the end of the 3-year period. The discount rate is 12 percent, and the tax rate is 21 percent. What will be the after-tax cash flow from the sale of the equipment at the end of the projectStep by Step Solution
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