Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: You are analyzing the buy of new equipment. Since you are not an expert on this type of equipment, you hire a consulting firm to make recommendations. The consultant charged you dollar 2,500 and recommended the purchase of the latest model from Equipment Corp. of America.  The equipment costs dollar 60,000, and it will cost another dollar 12,000 to modify it for special use by your firm.  The equipment will be depreciated on a straight-line basis over six years with no salvage value.  You expect the equipment will be sold after three years for dollar 18,000.  Use of the equipment will require an increase in your company's net working capital of dollar 3,000, but this dollar 3,000 will be recovered at the end of year three.  The use of the equipment will have no effect on revenues, but it is expected to save the firm dollar 30,000 per year in before-tax operating costs.  Your company's marginal tax rate is 40 percent. Determine the incremental free cash flow for the first year of the project?

[A]       $28,400

[B]       $30,880

[C]       $22,800

[D]       $24,750

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918472

Have any Question? 


Related Questions in Basic Finance

1 what dangers are encountered by mortgagees and unreleased

1. What dangers are encountered by mortgagees and unreleased mortgagors when property is sold "subject to" a mortgage? 2. What is the difference between equity of redemption and statutory redemption? 3. What special adva ...

What are current assets if a market is price efficienta

What are current assets? If a market is price efficient, a. Can an investor "beat the market"? b. Which type of portfolio management-active or passive-is best? What does the financing decision of a firm involve? List the ...

Discussion lets discuss the following based on the assigned

Discussion: Let's discuss the following (based on the assigned and recommneded reading): 1. Is Paying a Premium for Certain Securities Worth the Price? Are portfolio managers willing to pay a premium for securities that ...

How is the dupont system useful in analyzing a firms roa

How is the DuPont system useful in analyzing a firm's ROA and ROE? What information can be inferred from the decomposition of ROE into contributing ratios? What is the mathematical relationship between each of the indivi ...

Assume that jampf inc is operating at 85 percent of

Assume that J&F, Inc. is operating at 85 percent of capacity. All costs and net workingcapital vary directly with sales. What is the amount of total fixed assets required if salesare projected to increase by 20 percent?

You have a 1100 balance on your 15 credit card you have

You have a $1,100 balance on your 15% credit card. You have lost your job and been unemployed for 6 months. You have been unable to make any payments on your balance. However, you received a tax refund and want to pay of ...

How can a firm in need of short-term financing decide

How can a firm in need of short-term financing decide whether or not to take a cash discount offered by its supplier? How would this decision change in the event the firm has no alternative source of short-term financing ...

Go to wwwbloombergcomnewseconomy and locate an article

Go to www.bloomberg.com/news/economy/ and locate an article related to a recent Federal Reserve action. Write a brief summary of the article, and explain what impact it is likely to have on the economy and you as an indi ...

Ethan is investing 50 every month for 20 years the annual

Ethan is investing $50 every month for 20 years. The annual rate is 6%. How much money will Ethan have in 20 years? An investment promises to pay $3,000 yearly for 10 years. The payments are received at the beginning of ...

What is diversifiable risk what is the role of

What is diversifiable risk? What is the role of diversification in the capital asset pricing model? If investors are risk averse, which would they prefer: a stock with an expected return of 5% with a beta of 1.2 or a sto ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen