You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $300,000. The truck falls into the MACRS 5-year class, and it will be sold after 5 years for $55,000. Use of the truck will require an increase in NWC (spare parts inventory) of $5,500. The truck will have no effect on revenues, but its expected use at your company will save the firm $66,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be during year 3? Multiple Choice O $6,636 $60,000 $64,236 $109,740
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $300,000. The truck falls into the MACRS 5-year class, and it will be sold after 5 years for $55,000. Use of the truck will require an increase in NWC (spare parts inventory) of $5,500. The truck will have no effect on revenues, but its expected use at your company will save the firm $66,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be during year 3? Multiple Choice O $6,636 $60,000 $64,236 $109,740
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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