In: Finance
You have been asked by the president of your company to evaluate
the proposed acquisition of a new special-purpose truck for
$70,000. The truck falls into the MACRS 3-year class, and it will
be sold after three years for $20,800. Use of the truck will
require an increase in NWC (spare parts inventory) of $2,800. The
truck will have no effect on revenues, but it is expected to save
the firm $23,600 per year in before-tax operating costs, mainly
labor. The firm’s marginal tax rate is 34 percent.
What will the cash flows for this project be? (Negative
amounts should be indicated by a minus sign. Round your answers to
2 decimal places.)