?? e Home LookingGle O Quiz: Exam 3 C Consider Two proge l Home Chegg.com A Firm

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?? e Home LookingGle O Quiz: Exam 3 C Consider Two proge l Home Chegg.com A Firm is Consideri C Finance Archive ? ( A Firm Is Consideri + ? ? fù ?https://nmsu.instructure.com/courses/1156550/quizzes/1883847/take m???? O 23.600 STATE Question 16 4 pts A firm is considering the acquisition of a new machine. The base price is $85,000 and it would cost $15,000 to install. The machine is MACRS 3 year class property and it will be sold after 3 years for $17,000. The machine would also require an increase in net working capital of $10,000. The machine is expected to increase before tax revenues by $40,000 per year. This firm is in a 34% marginal tax bracket. MACRS 3 year factors are 33%, 45%. 15%, and 7% for years 1 through 4 respectively, what is the initial (year 0) net cash outflow O 100,00o O 95,000 O 110.000 O 25,000 D Question 17 4 pts 10:04 PM O Type here to search 6/18/2018 20

Explanation / Answer

$ 110,000

Working:

Base Price $           85,000 Installation Cost $           15,000 Investment in net working capital $           10,000 Initial (Year 0)net cash outflow $       1,10,000 Initial Net Cash outflow covers all type of investment made in beginning of project.

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