Alpha Manufacturing is evaluating the purchase of new production equipment. The equipment costs $620,000 with an expected useful life of 6 years and an estimated salvage value of $80,000. The equipment is expected to generate an annual increase in net income after tax of $135,000. What is the annual net cash flow from this investment?

Principles of Accounting Volume 2
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ISBN:9781947172609
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Chapter11: Capital Budgeting Decisions
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Alpha Manufacturing is evaluating the purchase of new
production equipment. The equipment costs $620,000 with
an expected useful life of 6 years and an estimated salvage
value of $80,000. The equipment is expected to generate an
annual increase in net income after tax of $135,000. What is
the annual net cash flow from this investment?
Transcribed Image Text:Alpha Manufacturing is evaluating the purchase of new production equipment. The equipment costs $620,000 with an expected useful life of 6 years and an estimated salvage value of $80,000. The equipment is expected to generate an annual increase in net income after tax of $135,000. What is the annual net cash flow from this investment?
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