What will be the estimated after-tax operating cash flow

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Reference no: EM131864967

1) Dexter Chemicals purchased a hexagromic isolator 10 years ago for $120,000. It is being depreciated on a straight-line basis over 15 years to an estimated salvage value of zero. If can be sold today for $10,000. Dexter is considering purchasing a new, more efficient isolator that would cost $270,000 installed and would be depreciated at a rate of 10% per year. The company’s marginal tax rate is 40%. If the new isolator is purchased, it is estimated that annual revenues will increase by $10,000 and annual expenses will decrease by $10,000. What will be the estimated after-tax operating cash flow in year 1 if the new isolator is purchased?

$18,800

$19,600

$20,100

$21,000

2) Genie Inc. will purchase new lamp molding equipment to replace an older, less efficient model. The new equipment costs $350,000 and shipping is $20,000. Installation and modification of the equipment is anticipated to cost $22,000. The old equipment has a book value of $25,000 and can be sold for $12,000. Inventories are expected to increase by $16,000, accounts receivable by $12,000, and accounts payable by $10,000 in conjunction with the new investment. If Genie has a marginal tax rate of 40%, what is the initial outlay for the replacement of the equipment?

a) $372,900

b) $382,800

c) $392,800

d) $400,400

Reference no: EM131864967

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