You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $390,000. The truck falls into the MACRS 7-year class, and it will be sold after 7 years for $64,000. Use of the truck will require an increase in NWC (spare parts inventory) of $6,400. The truck will have no effect on revenues, but its expected use at your company will save the firm $102,000 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?

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $390,000. The truck falls into the MACRS 7-year class, and it will be sold after 7 years for $64,000. Use of the truck will require an increase in NWC (spare parts inventory) of $6,400. The truck will have no effect on revenues, but its expected use at your company will save the firm $102,000 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?

Name: You have been asked by the president of your company to evaluate the
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Description: You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purposetruck for $390,000. The truck falls into the MACRS 7-year class, and it will be sold after 7 years for $64,000. Use of thetruck will re

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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