Geary Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $943,688 is estimated to result in $239.069 in annual pretax cost savings. The press falls in the MACRS five-year class (Refer to the MACRS table on page 277), and it will have a salvage value at the end of the project of $101.142. The press also requires an initial investment in spare parts inventory of $57,592, along with an additional $13,989 in inventory for each succeeding year of the project. If the shop's tax rate is 0.36 and its discount rate is 0.15, what is the total cash flow in year 4? (Do not round your intermediate calculations.) (Make sure you enter the number with the appropriate +/- sign)

Geary Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $943,688 is estimated to result in $239.069 in annual pretax cost savings. The press falls in the MACRS five-year class (Refer to the MACRS table on page 277), and it will have a salvage value at the end of the project of $101.142. The press also requires an initial investment in spare parts inventory of $57,592, along with an additional $13,989 in inventory for each succeeding year of the project. If the shop's tax rate is 0.36 and its discount rate is 0.15, what is the total cash flow in year 4? (Do not round your intermediate calculations.) (Make sure you enter the number with the appropriate +/- sign)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Define regulation D
Complete requirement 1
D, E, F
F, G, H
Apple Juice Corp plans to take up a project that will cost $150,000 of investment in Building and $80,000 in new machinery. Apple Juice Corp has already spent $8000 on research and analysis about the products that will be developed in this unit. By taking up this project, Apple Juice Corp. estimates additional cash flows of $85000 per annum for the next five years. COGS are expected to be 40% of the revenues, SG&A will be 4% of the revenues. This project will require an additional inventory of $60,000 and an increase in payables by $25000 Tax Rate is 20% The target Debt: Equity is 1:4 Cost of new debt: 6% Cost of Equity: Need to calculate using the beta of 0.9, Rf of 4%, and market risk premium of 6% The equipment that would be used has a 3-year tax life. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The Salvage value of Building and Machinery after 5 years is $100,000. You, as a financial…
two questions
What is cpj
Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…
I Need Formulation
can you answer d
I, J, K
D nctions Question 10 Use the diagram below to find each of the following: sine of point a • cose of point b • tane of point c d e