he Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $95,000. The machine had an expected he time of purchase, and it is being depreciated by the straight-line method by $9,500 per year. If the machine is not replaced, it can be sold he end of its useful life. new machine can be purchased for $180,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $4 ales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% epreciation at the time of purchase. he old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%. . If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow indicated by a minus sign. Round your answer to the nearest dollar. -135,000 . What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar. Year 1 Year 2 Year 3 Year 4 Year 5 30,500 $ $ 30,500 $ 30,500 $ 30,500 $ 30,500
he Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $95,000. The machine had an expected he time of purchase, and it is being depreciated by the straight-line method by $9,500 per year. If the machine is not replaced, it can be sold he end of its useful life. new machine can be purchased for $180,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $4 ales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% epreciation at the time of purchase. he old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%. . If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow indicated by a minus sign. Round your answer to the nearest dollar. -135,000 . What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar. Year 1 Year 2 Year 3 Year 4 Year 5 30,500 $ $ 30,500 $ 30,500 $ 30,500 $ 30,500
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 13PB: Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and...
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