Your firm is replacing a manually-operated machine with a fully automated machine. The old machine was purchased 5 years ago, had an original depreciable value of $140,000, and is depreciable using simplified straight-line for 10 years. The old machine has maintenance and defects costs totaling $9,000 per year. The current salvage value of the old machine is $12,000. The new machine costs $80,000 with shipping costs of $2,000. The new machine would be depreciated over 5 years using simplified straight line, and would have no salvage value after the fifth year. The new machine would have maintenance and defects costs totaling $4,000 per year. The tax rate is 21%. What is the annual cash flow for years 1 through 5 (not including the terminal cash flow) if the project is undertaken?
Your firm is replacing a manually-operated machine with a fully automated machine. The old machine was purchased 5 years ago, had an original
The tax rate is 21%. What is the annual cash flow for years 1 through 5 (not including the terminal cash flow) if the project is undertaken?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
