Author Question: Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost ... (Read 7842 times)

melina_rosy · **on:** Apr 25, 2021

Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost $190,000, and it will cost another $33,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class, and it will be sold after 3 years of use for $110,000. The machine will require an increase in net working capital of $9,000 and will have no effect on revenues, but is expected to save the firm $90,000 per year in before-tax operating costs, mainly labour. The company's marginal tax rate is 40%. What is the initial cash flow for the project?
◦ -$42,000
◦ -$190,000
◦ -$199,000
◦ -$223,000
◦ -$232,000

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

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