A $62,000 machine with an 8-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $77,000, with a 10-year class life. The new machine will not increase sales but will decrease operating costs by $1,000 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?

Cost of old machine = $62,000Useful life = 8 yearsNew machine cost = $77,000Useful life = 10…

Answered: A $62,000 machine with a 8-year class…

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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