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? (Points : 5)
$43,000
$21,000
$35,400
$31,800

Explanation / Answer

$35,400

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