Outback is purchasing a new machine that will cost $98,000. The machine will qualify as MACRS 5-year property but has an economic life of 8 years. The new machine is expected to increase revenues by $35,000 per year, and operating costs are expected to increase by $15,000 per year. If the firm's marginal tax rate is 34 percent and the first year's depreciation rate is 20 percent, what is the net cash flow in the first year. a. $7,984 b. $26,034 c. $19,864 d.
Outback is purchasing a new machine that will cost $98,000. The machine will qualify as MACRS 5-year property but has an economic life of 8 years. The new machine is expected to increase revenues by $35,000 per year, and operating costs are expected to increase by $15,000 per year. If the firm's marginal tax rate is 34 percent and the first year's depreciation rate is 20 percent, what is the net cash flow in the first year. a. $7,984 b. $26,034 c. $19,864 d.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Outback is purchasing a new machine that will cost $98,000. The machine will qualify as MACRS 5-year property but
has an economic life of 8 years. The new machine is expected to increase revenues by $35,000 per year, and
operating costs are expected to increase by $15,000 per year. If the firm's marginal tax rate is 34 percent and the first
year's
a.
$7,984
b.
$26,034
c.
$19,864
d.
$264
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