1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Paha777 [63]
3 years ago
14

You must evaluate a proposal to buy a new milling machine. The base price is $120,000, and shipping and installation costs would

add another $15,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $70,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The machine would require a S6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $46,000 per year. The marginal tax rate is 35%, and the WACC is 12%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine. ) What is the milling machine's terminal (non-operating) cash flow at the end of year 3?
A. $76,000
B. $54,440
C. $51,500
D. $54,808
Business
1 answer:
Vesnalui [34]3 years ago
5 0

Answer:

Option (D) is correct.

Explanation:

Cost = base price + shipping and installation costs

        = $120,000 + $15,000

        = $135,000

Depreciation Year 1 = 33% × 135000

                                 = 44,550

Depreciation Year 2 = 45% × 135000

                                  = 60,750

Depreciation Year 3 = 15% × 135000

                                  = 20,250

Accumulated Depreciation on machine at the end of year 3 :

= Depreciation Year 1 + Depreciation Year 2 + Depreciation Year 3

= 44,550 + 60,750 + 20,250

= 125,550

Hence Book Value at the end of year 3 = $135,000 - $125,550

                                                                  = $9,450

Sale Value = $70,000

Gain on sale of asset = $70000 - $9450

                                   = $60550

Tax on gain on sale of asset = 35% × 60550

                                                = $21,192.5

Hence, net cash flow from sale of asset = $70,000 - $21,192.5

                                                                   = $48,807.5

Terminal Cash Flow:

= Net Cash flow from sale of asset + net working capital

= $48,807.5 + $6,000

= $54,807.5 or $54,808

You might be interested in
Explain what a credit score is and what it tells you about the consumer. What are some ways you can maintain a proper credit sco
Dovator [93]
A credit score is a score that measures how likely you are to pay back a loan. If the score Is good that means they paid their loans on time. if the score is bad that means they aren't likely to pay any payments they are given through a loan. You can maintain a proper score by paying bills on time, when taking out loans pay the payments on time. and when you loan a car Pay. The. Payments.
6 0
3 years ago
Read 2 more answers
Robert works in the import-export department of Bank of America and he has noticed the following spot currency quotes: 1 U.S. do
lubasha [3.4K]

Answer:

2.3925

Explanation:

The computation of the Mexican pesos is shown below:

= (1 British pound × 1 U.S. dollar) ÷ 1 British pound for the Danish krone

= (1.65 × 10.875 ÷ 7.5)

= 2.3925 Mexican pesos

Simply we multiplied the 1 British pound with the 1 US dollar and then divide it by the 1 British pound for Danish krone so that the correct spot currency can come

3 0
2 years ago
In order to examine the potential success of its 1/3 pound Angus hamburger, McDonald's started offering and promoting the produc
maks197457 [2]

Answer: Test marketing

Explanation:

 The test marketing is one of the concept that helps in explaining the various type of marketing and the business field concepts as it providing the various types of opportunities for testing the goods.

The man aim of the test marketing is that it evaluating the overall sales performance of an specific organization.

According to the given question, the McDonald's is start promoting and also offer the various types of products and examining the success this is known as the test marketing evaluation process.

 Therefore, Test marketing is the correct answer.

   

8 0
3 years ago
Which of the following is true about presentation methods for providing training? Audiovisual techniques are most effective when
otez555 [7]

Answer:

The best answer for this question would be: Webcasting involves classroom instructions that are provided online through live broadcasts.  

Explanation:

The other answers are incorrect because:

Audiovisual techniques are most effective when combined with other training strategies to provide context and opportunity for the learners to practice what they have learned.  

Mobile technologies do not include simulation, case, studies, and on-the-job training.  

The best people to be trained through teleconferencing would be those who are working from an office position, though not located in the same area as the training provider.  

Classroom instruction is still a popular training method, because it's relative ease of access compared to other methods.

3 0
3 years ago
Too much socializing in the workplace can
iVinArrow [24]
Slow down the productivity of the workplace

7 0
3 years ago
Read 2 more answers
Other questions:
  • What are the two fundamental equality requirements of the double-entry accounting system?
    9·1 answer
  • The primary goal of the Federal Reserve system is to:
    15·1 answer
  • The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicat
    12·1 answer
  • How do comparative advantage and absolute advantage differ?
    14·1 answer
  • In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often
    15·1 answer
  • A liaison role exists when: _________
    12·1 answer
  • Windows and More is reviewing a project with sales of 6,200 units, ±2 percent, at a sales price of $29, ±1 percent, per unit. Th
    15·1 answer
  • You should FOLLOW UP on items that: ______________, _________________, ________________.
    9·1 answer
  • )An investor is trying to decide between a muni paying 5.75 percent or an equivalent taxablecorporate paying 8.25 percent. What
    14·1 answer
  • Which of the following account records would have the most current
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!