Question 52 ptsA $73,000 machine with a 8-year class life was purchased 6 years ago. Themachine will now be sold for $22,000 and replaced with a new machinecosting $54,000, with a 5-year class life. The new machine will not increasesales, but will decrease operating costs by $16,000 per year. Simplifiedstraight line depreciation is employed for both machines, and the marginalcorporate tax rate is 34 percent. What is the initial outlay for the project?NOTE-- ALTHOUGH THE INITIAL OUTLAY IS NEGATIVE, PLEASEENTER YOUR ANSWER AS A POSITIVE SIGN. IN OTHER WORDS, IFYOUR ANSWER IS -10,000, ENTER IT AS 10,000. DO NOT ENTER THEDOLLAR SIGN.

Solution 1. Calculate the book value of the old machine: Book value = Cost - Accumulated…

Answered: Question 5 2 pts A $73,000 machine with…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 8PROB

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Question 17 A $65,000 machine with a 7-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $78,000, with a 10-year class life. The new machine will non increase sales, but will decrease operating costs by $13,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the incremental annual cash flow associated with the project?
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question 9 Daily Enterprises is purchasing a $9.6million machine. It will cost $52,000to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.1 million per year along with incremental costs of $1.1 million per year. Daily's marginal tax rate is 21%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine? The free cash flow for year 0 will be $_______.(Round to the nearest dollar.) The free cash flow for years 1–5will be $_______. (Round to the nearest dollar.)
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Q No.1 A company is considering an investment proposal to install new milling machine. The project will cost Rs.50,000. The facility has a life expectancy of 5 years and no salvage value. The company tax rate is 40%. Firm uses straight-line method for depreciation. The estimated earning before tax from the proposed investment plan are as under. Year Earning before tax 22,000 18,000 14,000 15,000 25,000 Compute cash flow for 5 years.

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