What is the terminal year after-tax nonoperating cash flow at the end of year five? A. ($108),000.

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What is the terminal year after-tax nonoperating cash flow at the end of year five?

A. \($108\),000.

B. \($132\),000.

C. \($180\),000.

McConachie Company is considering the purchase of a new 400-ton stamping press. The press costs \($360\),000, and an additional \($40\),000 is needed to install it. The press will be depreciated straight-line to zero over a five-year life. The press will generate no additional revenues, but it will reduce cash operating expenses by \($140\),000 annually.
The press will be sold for \($120\),000 after five years. An inventory investment of \($60\),000 is required during the life of the investment. McConachie is in the 40 percent tax bracket.

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Corporate Finance A Practical Approach

ISBN: 9781118217290

2nd Edition

Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan

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