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A firm is contemplating a new, mechanized welding system to replace its current manual system. It...

A firm is contemplating a new, mechanized welding system to replace its current manual system. It costs $600,000 to get the new system. The cost will be depreciated at a 30 percent CCA rate. Its expected life is four years. The system would actually be worth $100,000 at the end of fours years. The management thinks the new system could save $180,000 per year pre-tax in labour costs. The tax rate is 44 percent and the required return is 15 percent.
Calculate the total cash flows year 1–4?

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jeff jeffy answered 1 year ago
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