Nickel Industries Is Considering the Purchase of a New Machine

question 26

Multiple Choice

Nickel Industries is considering the purchase of a new machine that will cost $178,000,plus an additional $12,000 to ship and install.The new machine will have a 5-year useful life and will be depreciated using the straight-line method.The machine is expected to generate new sales of $85,000 per year and is expected to increase operating costs by $10,000 annually.Nickel's income tax rate is 40%.What is the projected incremental cash flow of the machine for year 1?

• A) $54,800
• B) $60,200
• C) $66,350
• D) $68,200

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Definitions:

Leaking Taps

A plumbing issue involving taps that drip or leak water, indicating a potential need for repair or replacement.

Repairs

The actions taken to restore something damaged or malfunctioning to a good or working condition.

Deducted

Subtracted from a total amount, usually referring to amounts removed from income or expenses for the purpose of calculation.

Sued

The act of bringing a lawsuit against an individual or entity, claiming that they committed a wrong or injustice that should be remedied through legal action.