Ann A. Nicole Industries is considering the purchase of a new machine that will

Question

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%. What is the projected cash flow of the machine for year 1? Show your work....

$43,000

$21,000

$31,800

$35,400

$43,000

$21,000

$31,800

$35,400

Explanation / Answer

Initial Cost(A) 152000 Install & shipping(B) 8000 Salvage Value

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