Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![### Determining Incremental Cash Flow Between Machines
#### Question 15: Cash Flow Analysis
Given the cash flows, determine the incremental cash flow between machines B and A:
- (a) in year 0
- (b) in year 3
- (c) in year 6
#### Machine Details:
| | Machine A | Machine B |
|------------------------|-----------|-----------|
| **First Cost, $** | -13,000 | -25,000 |
| **AOC, $ per Year** | -1,300 | -400 |
| **Salvage Value, $** | 5,000 | 6,000 |
| **Life, Years** | 3 | 6 |
##### Incremental Cash Flow Calculations:
(a) The incremental cash flow between machines B and A in year 0 is $ _______.
(b) The incremental cash flow between machines B and A in year 3 is $ _______.
(c) The incremental cash flow between machines B and A in year 6 is $ _______.
This exercise is designed to teach students how to compare cash flows of different investment options over time in order to make more informed financial decisions.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff4f4865a-ef7d-48b6-9e5b-0e85084b2d7c%2F37d992e2-8ecd-476c-affe-d5ffdf6f672d%2Fn2v2n79_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Determining Incremental Cash Flow Between Machines
#### Question 15: Cash Flow Analysis
Given the cash flows, determine the incremental cash flow between machines B and A:
- (a) in year 0
- (b) in year 3
- (c) in year 6
#### Machine Details:
| | Machine A | Machine B |
|------------------------|-----------|-----------|
| **First Cost, $** | -13,000 | -25,000 |
| **AOC, $ per Year** | -1,300 | -400 |
| **Salvage Value, $** | 5,000 | 6,000 |
| **Life, Years** | 3 | 6 |
##### Incremental Cash Flow Calculations:
(a) The incremental cash flow between machines B and A in year 0 is $ _______.
(b) The incremental cash flow between machines B and A in year 3 is $ _______.
(c) The incremental cash flow between machines B and A in year 6 is $ _______.
This exercise is designed to teach students how to compare cash flows of different investment options over time in order to make more informed financial decisions.
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