Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your company plans to produce a product for two more years and then to shut down production. You are considering replacing an old machine used

image text in transcribed
Your company plans to produce a product for two more years and then to shut down production. You are considering replacing an old machine used in production with a new machine. The Old machine originally cost $886 and was bought Three (3) years ago (i.e. it has depreciated for three years). It could be sold today for $404 or sold in two years for $118. The New machine would cost $595 and could be sold in two years for $336. The new machine is more efficient than the old machine and would reduce waste, and therefore the cost of materials, by $380 per year. Due to the lower waste, we could also have a one-time reduction in inventory of 136 . The firm's tax rate is 27%. Both machines are in the 4 year MACRS class, use these rounded depreciation amounts of 15%,45%,33% and 7% in your calculation. What are the total Operating Cash Flows in the first year (Year 1) with the new machine? Enter your answer to the nearest $.01. Do not use $ or, in your answer. Use a - sign if the cash flows are negative

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_2

Step: 3

blur-text-image_3

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

Contemporary Financial Management Fundamentals

Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao

1st Edition

0324015771, 9780324015775

More Books

Students also viewed these Finance questions

Question

How did Socrates challenge the relativism of Protagoras?

Answered: 1 week ago

Question

What are their resources?

Answered: 1 week ago