Table 11.3 Cuda Marine Engines, Inc. Must Develop the Relevant Cash Flows

question 56

Multiple Choice

Table 11.3
Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs $50,000 and has installation costs of $3,000. The asset will be depreciated using a five-year recovery schedule. The existing equipment, which originally cost $25,000 and will be sold for $10,000, has been depreciated using an MACRS five-year recovery schedule and three years of depreciation has already been taken. The new equipment is expected to result in incremental before-tax net profits of $15,000 per year. The firm has a 40 percent tax rate.
-The incremental depreciation expense for year 1 is ________. (See Table 11.3)

• A) $2,250
• B) $7,600
• C) $7,000
• D) $7,950

---

Definitions:

Major Depressive Disorder

A condition of mental health marked by ceaseless gloominess or indifference towards usual pursuits, significantly encumbering daily routines.

Psychological Problem

Refers to a mental or emotional issue that affects an individual's thinking, feeling, behavior, and overall functioning.

Medically Treated

The process of receiving interventions, procedures, or medications under the supervision of healthcare professionals to address health conditions.

Grandiose Plans

Highly ambitious or idealistic plans that may be unrealistic or difficult to achieve.