Sideshow Bob's Circus is considering replacing its current Whack-A-Mole machines with a new and improved model....
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Sideshow Bob's Circus is considering replacing its current Whack-A-Mole machines with a new and improved model. The old machines cost $800,000 6 years ago and is being depreciated to zero using 10-year straight-line depreciation. These old Whack-A-Mole machines has a current salvage value of $250,000. The new machines, The Wacky Whack-A-Mole, cost $1,100,000 today and would be depreciated (expensed) immediately at t=0 under 100% Bonus Depreciation and would have a 5-year useful life. Revenues would rise $50,000 annually and operating costs would decrease $150,000 annually if the old machines are replaced. The company's marginal tax rate is 25%. Refer to Sideshow Bob's Circus, what is the year 2 operating cash flow for this potential replacement project if Sideshow Bob's tax rate is 25%? Sideshow Bob's Circus is considering replacing its current Whack-A-Mole machines with a new and improved model. The old machines cost $800,000 6 years ago and is being depreciated to zero using 10-year straight-line depreciation. These old Whack-A-Mole machines has a current salvage value of $250,000. The new machines, The Wacky Whack-A-Mole, cost $1,100,000 today and would be depreciated (expensed) immediately at t=0 under 100% Bonus Depreciation and would have a 5-year useful life. Revenues would rise $50,000 annually and operating costs would decrease $150,000 annually if the old machines are replaced. The company's marginal tax rate is 25%. Refer to Sideshow Bob's Circus, what is the year 2 operating cash flow for this potential replacement project if Sideshow Bob's tax rate is 25%?
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Heres how to calculate the year 2 operating cash flow OCF for Sideshow Bobs Circuss potential WhackA... View the full answer
Related Book For
Financial Management Principles and Applications
ISBN: 978-0134417219
13th edition
Authors: Sheridan Titman, Arthur J. Keown, John H. Martin
Posted Date:
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