## (Answered)-Your company is considering a machine that will cost \$ 3,493 at

Your company is considering a machine that will cost \$ 3,493 at Time 0 and which can be sold after 3 years for \$ 416 . To operate the machine, \$ 597 must be invested at Time 0 in inventories; these funds will be recovered when the machine is retired at the end of Year 3. The machine will produce sales revenues of \$ 1,013 /year for 3 years; variable operating costs (excluding depreciation) will be 60 percent of sales. Operating cash inflows will begin 1 year from today (at Time 1). The machine is in the 3-year MACRS class. The MACRS class has depreciation of 33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4. The company has a 33 percent tax rate, enough taxable income from other assets to enable it to get a tax refund from this project if the project's income is negative, and a 10 percent cost of capital. Inflation is zero. What are the terminal cash flows associated with ending this project? Note, I want only the Year 3 terminal cash flows, not the year 3 operating cash flows.

Your company is considering a machine that will cost \$ 3,493 at

Time 0 and which can be sold after 3 years for \$ 416 . To operate

the machine, \$ 597 must be invested at Time 0 in inventories;

these funds will be recovered when the machine is retired at the

end of Year 3. The machine will produce sales revenues of \$

1,013 /year for 3 years; variable operating costs (excluding

depreciation) will be 60 percent of sales. Operating cash inflows

will begin 1 year from today (at Time 1). The machine is in the 3year MACRS class. The MACRS class has depreciation of 33% in

year 1, 45% in year 2, 15% in year 3, and 7% in year 4. The

company has a 33 percent tax rate, enough taxable income from

other assets to enable it to get a tax refund from this project if

the project's income is negative, and a 10 percent cost of capital.

Inflation is zero. What are the terminal cash flows associated with

ending this project? Note, I want only the Year 3 terminal cash

flows, not the year 3 operating cash flows.

Solution details:
STATUS
QUALITY
Approved

This question was answered on: Oct 07, 2020

Solution~0002182404.zip (25.37 KB)

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)

STATUS

QUALITY

Approved

Oct 07, 2020

EXPERT

Tutor