A $58,000 machine with a 9-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $81,000, with a 8-year class life. The new machine will not increase sales, but will decrease operating costs by $15,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the incremental annual cash flow associated with the project? SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO THE NEAREST WHOLE NUMBER AT THE END. DO NOT ENTER THE DOLLAR SIGN. FOR EXAMPLE, IF YOUR ANSWER IS $1000, ENTER 1000.
A $58,000 machine with a 9-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $81,000, with a 8-year class life. The new machine will not increase sales, but will decrease operating costs by $15,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the incremental annual cash flow associated with the project? SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO THE NEAREST WHOLE NUMBER AT THE END. DO NOT ENTER THE DOLLAR SIGN. FOR EXAMPLE, IF YOUR ANSWER IS $1000, ENTER 1000.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A $58,000 machine with a 9-year class life was purchased 2 years ago. The machine will now be
sold for $50,000 and replaced with a new machine costing $81,000, with a 8-year class life. The
new machine will not increase sales, but will decrease operating costs by $15,000 per year.
Simplified straight line depreciation is employed for both machines, and the marginal corporate
tax rate is 34 percent. What is the incremental annual cash flow associated with the project? SET
YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO THE NEAREST WHOLE
NUMBER AT THE END. DO NOT ENTER THE DOLLAR SIGN. FOR EXAMPLE, IF YOUR
ANSWER IS $1000, ENTER 1000.
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