10. Your firm is replacing a manually-operated machine with a fully automated machine. The old machine...

10. Your firm is replacing a manually-operated machine with a fully automated machine. The old machine was purchased 5 years ago, had an original depreciable value of $140,000, and is depreciable using simplified straight-line for 10 years. The old machine has maintenance and defects costs totaling $9,000 per year. The current salvage value of the old machine is $12,000. The new machine costs $80,000 with shipping costs of $2,000. The new machine would be depreciated over 5 years using simplified straight line, and would have no salvage value after the fifth year. The new machine would have maintenance and defects costs totaling $4,000 per year. The tax rate is 21%. What is the annual cash flow for years 1 through 5 (not including the terminal cash flow) if the project is undertaken? a) $5,000 d) $2,054 b) $2,600 e) $3,950 c) $4,454 Answer is C but how do you get that?

Expert Solution

jeff jeffy answered 1 year ago

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