Question

Asked Oct 20, 2019

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Finance help

Step 1

The purchase cost of new equipment is $328,000 and installation cost is $109,000. So, the total cost over new equipment will be $328,000 + $109,000 = $437,000.

According to straight line depreciation, the annual depreciation is calculated below:

Step 2

Cash outflow at time 0, is calculated below:

Step 3

When calculating operating gross profit, depreciation is deducted from revenue which will decrease the cash flow. So, it is needed to add b...

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