General Inc. is considering buying a $220,000 production machine. It would be depreciated (simplified straight line) for 10 years. This investment would allow the firm to increase sales by $140,000 per year. Operating expenses would increase by $70,000 per year also. The corporate tax rate is 21%. What is the annual cash flow for the project? $170,520 $68,000 $75,720 $71,100 $59,920

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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General Inc. is considering buying a $220,000 production machine. It would be depreciated (simplified straight line)
for 10 years. This investment would allow the firm to increase sales by $140,000 per year. Operating expenses
would increase by $70,000 per year also. The corporate tax rate is 21%. What is the annual cash flow for the
project?
$170,520
$68,000
$75,720
$71,100
$59,920
Transcribed Image Text:General Inc. is considering buying a $220,000 production machine. It would be depreciated (simplified straight line) for 10 years. This investment would allow the firm to increase sales by $140,000 per year. Operating expenses would increase by $70,000 per year also. The corporate tax rate is 21%. What is the annual cash flow for the project? $170,520 $68,000 $75,720 $71,100 $59,920
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