ou are evaluating the proposed acquisition of a new machine costing $70,000, and it falls into the MACRS 3-year class. Purchase of the machine would require an increase of net operating working capital of $6,000, which will be recovered when the machine is sold. The machine would increase the firm's revenues by $26,000 per year and its operating costs by $14,000 per year. The machine is expected to be used only for 3 years and then be sold for $27,000. The firm's marginal tax rate is 29 percent, and the project's cost of capital is 14 percent. What is the non-operating terminal cash flows at year 3? MACRS 3-year schedule is as follows: 33%, 45%, 15%, and 7% for years 1 to 4, respectively. Question 13 options: $26,591 $26,931 $27,161 $27,401 $27,591
ou are evaluating the proposed acquisition of a new machine costing $70,000, and it falls into the MACRS 3-year class. Purchase of the machine would require an increase of net operating working capital of $6,000, which will be recovered when the machine is sold. The machine would increase the firm's revenues by $26,000 per year and its operating costs by $14,000 per year. The machine is expected to be used only for 3 years and then be sold for $27,000. The firm's marginal tax rate is 29 percent, and the project's cost of capital is 14 percent. What is the non-operating terminal cash flows at year 3? MACRS 3-year schedule is as follows: 33%, 45%, 15%, and 7% for years 1 to 4, respectively. Question 13 options: $26,591 $26,931 $27,161 $27,401 $27,591
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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Question
You are evaluating the proposed acquisition of a new machine costing $70,000, and it falls into the MACRS 3-year class. Purchase of the machine would require an increase of net operating working capital of $6,000, which will be recovered when the machine is sold. The machine would increase the firm's revenues by $26,000 per year and its operating costs by $14,000 per year. The machine is expected to be used only for 3 years and then be sold for $27,000. The firm's marginal tax rate is 29 percent, and the project's cost of capital is 14 percent. What is the non-operating terminal cash flows at year 3? MACRS 3-year schedule is as follows: 33%, 45%, 15%, and 7% for years 1 to 4, respectively.
Question 13 options:
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$26,591
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$26,931
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$27,161
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$27,401
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$27,591
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$27,811
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