Problemann a nicole industries is considering the purchase, Ask an Expert

Accounting

Problem:

Ann A. Nicole Industries is considering the purchase of a new machine that will cost $152,000, plus an additional $8,000 to ship and install. The new machine will have a 5-year useful life and will be depreciated to its expected salvage value of $20,000 using the straight-line method. The machine is expected to generate new sales of $65,000 per year and is expected to increase labor and electrical expenses by $12,000 annually. Ann's income tax rate is 40%.

Required:

Question: What is the projected cash flow of the machine for year 1?

$43,000
$21,000
$31,800
$35,400

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166863

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