Evaluate the proposed acquisition of new special-purpose

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Reference no: EM13911676

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $130,000. The truck falls into the MACRS 10-year class, and it will be sold after 10 years for $13,000. Use of the truck will require an increase in NWC (spare parts inventory) of $4,300. The truck will have no effect on revenues, but it is expected to save the firm $53,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent. What will the cash flows for this project be during year 2? $41,160 $55,200 $29,600 $48,700

Reference no: EM13911676

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