Crossroad Corporation is trying to decide whether to invest to automate a production line. If the...

 

 

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Crossroad Corporation is trying to decide whether to invest to automate a production line. If the project is accepted, labor costs will decrease by $630,000 per year. However, other cash operating expenses will increase by $144,000 per year. The equipment will cost $261,000 and is depreciable over 7 years using simplified straight line to a zero salvage value. Crossroad will invest $47,000 in net working capital at installation. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows associated with the new project. Set your calculator to 4 decimal places and round to a whole number at the end. Do not enter the dollar sign. For example, if your answer is 1,000, enter it as 1000. 8 Crossroad Corporation is trying to decide whether to invest to automate a production line. If the project is accepted, labor costs will decrease by $630,000 per year. However, other cash operating expenses will increase by $144,000 per year. The equipment will cost $261,000 and is depreciable over 7 years using simplified straight line to a zero salvage value. Crossroad will invest $47,000 in net working capital at installation. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows associated with the new project. Set your calculator to 4 decimal places and round to a whole number at the end. Do not enter the dollar sign. For example, if your answer is 1,000, enter it as 1000. 8

Answer rating: 100% (QA)

Heres a breakdown of the annual cash flows associated with the new project for Crossroad Co... View the full answer