The Kevin Durant Co. is considering the purchase of some new machinery. The new machinery costs $100,000. The machinery will be depreciated on a straight-line basis for three years and it will be sold after three years for $8, 200. The machinery will require company to increase working capital by $4,800 which will be recovered at the end of the machinery's life. The machinery is not anticipated to increase revenues but it will save the company $146,400 in costs each year of the project's three year life. The company has a 10% cost of capital and has a 20% tax rate. What is the operating cash flow for this project in year 1? Multiple Choice $123, 787 $146,400 $55,947 S 117,120 What is the intital cash outlay for this project? Multiple Choice - $100,000 - $33,333 -$5 104,800 $95,200 What is the total cash flow of the project in its terminal year? Multiple Choice S 123,787 $128,587 $135, 147 $130,347
The Kevin Durant Co. is considering the purchase of some new machinery. The new machinery costs $100,000. The machinery will be depreciated on a straight-line basis for three years and it will be sold after three years for $8, 200. The machinery will require company to increase working capital by $4,800 which will be recovered at the end of the machinery's life. The machinery is not anticipated to increase revenues but it will save the company $146,400 in costs each year of the project's three year life. The company has a 10% cost of capital and has a 20% tax rate. What is the operating cash flow for this project in year 1? Multiple Choice $123, 787 $146,400 $55,947 S 117,120 What is the intital cash outlay for this project? Multiple Choice - $100,000 - $33,333 -$5 104,800 $95,200 What is the total cash flow of the project in its terminal year? Multiple Choice S 123,787 $128,587 $135, 147 $130,347
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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Transcribed Image Text:The Kevin Durant Co. is considering the purchase of some new machinery. The new machinery
costs $100,000. The machinery will be depreciated on a straight-line basis for three years and it
will be sold after three years for $8, 200. The machinery will require company to increase working
capital by $4,800 which will be recovered at the end of the machinery's life. The machinery is not
anticipated to increase revenues but it will save the company $146,400 in costs each year of the
project's three year life. The company has a 10% cost of capital and has a 20% tax rate. What is the
operating cash flow for this project in year 1? Multiple Choice $123, 787 $146,400 $55,947 $
117,120 What is the intital cash outlay for this project? Multiple Choice - $100,000 - $33,333 -$
104,800 - $95,200 What is the total cash flow of the project in its terminal year? Multiple Choice $
123,787 $128,587 $135, 147 $130,347
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