Author Question: A new tire balancing machine is available to replace an existing one. The new one will cost $5,092. ... (Read 24 times)

rosent76 · **on:** Apr 25, 2021

Question 1

When calculating the cash flows for a project, you should include interest payments.
◦ true
◦ false

Question 2

A new tire balancing machine is available to replace an existing one. The new one will cost $5,092. The old one originally cost $2,594 and was being depreciated over its 3-year life using MACRS. Two years have passed since the old one was purchased. Shipping of the new machine will cost $320. Assume a 40% tax rate. What is the net initial cash flow? Assume the old machine cannot be sold. (Round answer to nearest dollar.)

MACRS Depreciation Rates

Year	3-Year	5-Year
1	33.33%	20.00%
2	44.45%	32.00%

◦ $5,258
◦ -$5,258
◦ -$5,412
◦ $5,181
◦ -$5,181

parshano · **Reply #1 on:** Apr 25, 2021

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