Quip Corporation Wants to Purchase a New Machine for $300,000

question 80

Multiple Choice

Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machine will produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with an assumed residual (salvage) value of $50,000. Quip's combined income tax rate, t, is 40%.

What is the net after-tax cash inflow in Year 1 from the proposed investment, rounded to the nearest whole dollar?

• A) $72,000.
• B) $92,000.
• C) $96,000.
• D) $102,000.
• E) $120,000.

---

Definitions:

Conservative Clothing

Attire that is traditional or modest in style, often preferred in formal or professional settings.

Creative Imagery

The use of vivid and imaginative visualizations to enhance creativity, solve problems, or improve performance in various contexts.

Handling Stress

The techniques and methods used to manage and alleviate stress, aiming to maintain personal well-being and productivity.

Creative Imagery

The use of vivid and imaginative visual representations to enhance communication, storytelling, or problem-solving.