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Author Question: Meals on Wings Inc., which supplies prepared meals for corporate aircraft, needs to purchase new ... (Read 35 times)

jc611

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Meals on Wings Inc., which supplies prepared meals for corporate aircraft, needs to purchase new broilers. The new broilers would replace broilers purchased 10 years ago for $105,000, which are being depreciated on a straight-line basis to a zero salvage value (15-year depreciable life). The old broilers can be sold today for $63,000. The new broilers will cost $202,000, installed (not counting funds already spent), and will be depreciated using straight-line depreciation over their 5-year life. They will be sold at their book value at the end of the 5th year. The firm expects to increase its revenues by $27,000 per year if the new broilers are purchased, but cash expenses will also increase by $3,000 per year. Annual interest expense will be $2,000, and net working capital will increase by $5,000. The new broilers will occupy space currently leased to another firm for $530 per month, and $5,000 has already been spent preparing the building for new broilers. The firm's tax rate is 40%. What is the initial cash flow for the project? Round your answers to the nearest dollar.
◦ -$160,200
◦ -$155,200
◦ -$148,200
◦ -$145,200
◦ -$141,200


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Marked as best answer by jc611 on Apr 25, 2021

31809pancho

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jc611

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Reply 2 on: Apr 25, 2021
Excellent


JaynaD87

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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