What is the year one operating cash flow

Assignment Help Financial Management

Reference no: EM13920061

A firm is considering the acquisition of a new machine. The base price is $85,000 and it would cost $15,000 to install. The machine is MACRS 3 year class property and it will be sold after 3 years for $17,000. The machine would also require an increase in net working capital of $10,000. The machine is expected to increase before tax revenues by $40,000 per year. This firm is in a 34% marginal tax bracket. MACRS 3 year factors are 33%, 45%, 15%, and 7% for years 1 through 4 respectively. What is the year 1 operating cash flow?

A. 110,000

B. 37,620

C. 26,400

D. 11,220

Reference no: EM13920061

Questions Cloud

What is role of a market maker in the purchase of stock : Explain the difference between the NYSE, NASDAQ and the O.T.C. In your answer explain which market is organized and unorganized? What is the role of a “market maker” in the purchase of stock?

Reading of the text and supplemental materials : 1. Fill in brief definitions of each primary ethical theory. 2. Identify alternate names or variations of each ethical system based on your reading of the text and supplemental materials. Match the real-world examples listed below with the correspon..

Net cash inflow from operating activities : Provide a reasonable explanation as to what may have caused the netcash inflow from operating activities.

The consensus forecast of leading economists : Zane Perelli currently has $100 that he can spend today on polo shirts costing $25 each. Alternatively, he could invest the $100 in a risk-free U.S. Treasury security that is expected to earn a 9% nominal rate of interest. The consensus forecast of l..

What is the year one operating cash flow : A firm is considering the acquisition of a new machine. The base price is $85,000 and it would cost $15,000 to install. The machine is MACRS 3 year class property and it will be sold after 3 years for $17,000. The machine would also require an increa..

Sale of product known to be harmful : Many ethical issues existed within in the Dalkon Shield scandal. "There is ample evidence that A. H. Robins Company advertised, developed, tested, exported, and continued to market a product that was known to be dangerous and ineffective"

Different types of value in the valuation process : Valuation of a firm's financial assets is said to be based on what is expected in the future, in terms of the future performance of the firm, the industry, and the economy. What types of value would you consider when assigning value to a firm's stock..

Indicate how each of the events would be classified : Prepare a statement of cash flows. Assume All Star Automotive had a beginning cash balance of $9,000.

Issue of type of stock would affect the stockholders equity : The Shepersky Corporation was authorized to issue 2,000,000 shares of $0.01 par value common stock and 200,000 shares of $50 par value, 10 percent preferred stock. To date, Shepersky has issued 600,000 shares of common stock and no preferred stock. ..

User Account

All Pages