A New Replacement Machine Is Being Considered That Will Save

question 59

Multiple Choice

A new replacement machine is being considered that will save $105,000 per year in labor cost and $20,000 on maintenance. The company's marginal tax rate is 34%.  The replacement will also generate a tax savings from depreciation of $5,000. Estimate the incremental cash flow for the first year associated with buying the new machine.

• A)$87,500
• B)$82,500
• C)$42,500
• D)$51,100

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Definitions:

Inorganic Substance

A chemical compound that lacks carbon-hydrogen bonds, typical of non-living systems, such as minerals and metals.

Iodide Ions

Negatively charged ions of iodine, essential for thyroid gland function and hormone production.

Calcium Ions

Electrically charged calcium atoms that play a crucial role in various cellular processes including muscle contraction, neurotransmission, and enzyme activity.

Acid

A substance that donates hydrogen ions or protons and accepts electrons, often associated with a sour taste and capable of turning blue litmus paper red.