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What is the year-0 cash flow required to purchase

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Sixteen years ago, the Morris Corporation purchased a milling machine for $250,000. It is being depreciated on straight-line basis to an estimated $25,000 salvage over a 20 year period. The firm is now considering selling the old machine and purchasing a new one at a cost of $300.000. The new machine will require an addition of $20,000 to working capital. The firm's income tax rate (federal plus state) is 35%.

What is the Year-0 cash flow required to purchase the new machine, if the old machine is sold for $70,000?

Reference no: EM133122474

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