A Company Is Considering Investing in a Piece of Machinery

question 96

Multiple Choice

A company is considering investing in a piece of machinery costing $400,000.The investment will provide an additional $142,000 in additional sales each year and its annual cash operating expenses are expected to be $51,000.The machine will be depreciated on a straight-line basis over an 8-year life with no estimated salvage value.The company has a 40% tax rate.How much are annual operating cash flows?

• A)$54,600
• B)$24,600
• C)$4,600
• D)$74,600

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