A New Replacement Machine Is Being Considered That Will Save

question 59

Multiple Choice

A new replacement machine is being considered that will save $105,000 per year in labor cost and $20,000 on maintenance. The company's marginal tax rate is 34%.  The replacement will also generate a tax savings from depreciation of $5,000. Estimate the incremental cash flow for the first year associated with buying the new machine.

• A)$87,500
• B)$82,500
• C)$42,500
• D)$51,100

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Definitions:

Anxiety Reduction

The process of lessening or alleviating feelings of anxiety, stress, or worry, which can be achieved through various therapeutic techniques, relaxation methods, or medications.

Antagonist

In physiology and pharmacology, a substance that inhibits or counteracts the action of a neurotransmitter or hormone; in literature, a character or force opposing the protagonist.

Neurotransmitters

Chemical messengers that transmit signals across synapses from one neuron to another in the nervous system, influencing various bodily functions.

Reuptake

The process by which neurotransmitters are absorbed back into a neuron after they have transmitted a neural impulse across the synapse.