you have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $70,000. The Truck falls into the MACRS three-year class, and it will be sold after 3 years for $5,000. Use of the truck will require an increase in NWC of $10,000. The truck will have no effect on revenues, but it is expected to save the firm $32,000 per year in before-tax operating costs, mainly labour. The firm's marginal tax rate is 40 percent. What will the operating cashflow for this project be during year 2?
you have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $70,000. The Truck falls into the MACRS three-year class, and it will be sold after 3 years for $5,000. Use of the truck will require an increase in NWC of $10,000. The truck will have no effect on revenues, but it is expected to save the firm $32,000 per year in before-tax operating costs, mainly labour. The firm's marginal tax rate is 40 percent. What will the operating cashflow for this project be during year 2?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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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 $70,000. The Truck falls into the MACRS three-year class, and it will be sold after 3 years for $5,000. Use of the truck will require an increase in NWC of $10,000. The truck will have no effect on revenues, but it is expected to save the firm $32,000 per year in before-tax operating costs, mainly labour. The firm's marginal tax rate is 40 percent. What will the operating cashflow for this project be during year 2?
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