You Have Been Asked by the President of Your Company

question 35

Multiple Choice

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS three-year class, and it will be sold after three years for $5,000. Use of the truck will require an increase in NWC (spare parts inventory) of $2,000. The truck will have no effect on revenues, but it is expected to save the firm $25,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent. What will the operating cash flow for this project be during year 2?

• A)$21,890
• B)$22,225
• C)$22,690
• D)$23,890

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Definitions:

Late Adulthood

The final stage of the human life cycle, often considered to start around the age of 65 years.

Kübler-Ross's Stages

A theory introduced by Elisabeth Kübler-Ross in her 1969 book "On Death and Dying," outlining five stages of grief: denial, anger, bargaining, depression, and acceptance.

Dying

The end stage of life in which bodily processes decline, leading to death.

Anger

An emotional response characterized by annoyance, displeasure, or hostility.