A $62,000 machine with a 6-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $97,000, with a 8-year class life. The new machine will not increase sales, but will decrease operating costs by $12,000 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 NUMBERAT THE END. DO NOT ENTER THE DOLLAR SIGN. FOR EXAMPLE, IF YOUR ANSWER IS $1000, ENTER 1000.
A $62,000 machine with a 6-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $97,000, with a 8-year class life. The new machine will not increase sales, but will decrease operating costs by $12,000 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 NUMBERAT 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
Related questions
Question
F1
Transcribed Image Text:A $62,000 machine with a 6-year class life was purchased 2 years ago. The
machine will now be sold for $50,000 and replaced with a new machine costing
$97,000, with a 8-year class life. The new machine will not increase sales, but
will decrease operating costs by $12,000 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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education