Jones Crusher Company is evaluating the proposed acquisition of a ...

[olgavictoria]

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 cash flow from the project for year 1? 

MACRS Depreciation Rates

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

◦ $90,000
◦ $83,730
◦ $79,331
◦ $71,840
◦ $9,404

[livaneabi]

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[olgavictoria]

Thanks for the timely response, appreciate it

[Jossy]

Gracias!