PDCorporation Is Considering the Purchase of a High-Speed Lathe That

question 54

Essay

P.D.Corporation is considering the purchase of a high-speed lathe that has an invoice price of $250,000.The cost to ship the lathe to P.D.'s factory is $10,000,and the existing facilities will require modifications that are expected to cost $20,000.The machine will be depreciated on a straight-line basis over its useful life of 10 years,assuming no salvage value.P.D.Corporation is planning on paying for the lathe using a line of credit at the bank that has an interest rate of 6 percent per year.The lathe is expected to increase production and sales.Sales are expected to increase by $100,000 per year.Inventory and accounts receivable balances are expected to increase by $10,000 and $20,000 respectively.Expenses to operate the lathe are $25,000 per year.P.D.'s marginal tax rate is 40%.
a.Calculate the initial outlay required to fund this project.
b.Calculate the incremental after-tax cash flow in year one of the project.

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Definitions:

Non-Aroused State

A physiological and psychological condition of not being sexually excited or stimulated.

Sexual Response Cycle

A model describing the physiological responses that occur in the body during sexual activity, typically divided into stages such as excitement, plateau, orgasm, and resolution.

Resolution Stage

The final phase in some theories of sexual response, during which the body returns to its normal state after climax, and can also refer to resolving conflict or problem-solving stages in various contexts.

Human Sexuality

An area of research and understanding encompassing a broad range of topics, including sexual behavior, sexual orientation, and sexual health.