Question: Admiralty Corporation is analyzing a proposal to switch its factory over to a lights-out operation. To do so, it must acquire a fully automated machine.

Admiralty is analyzing a proposal to switch its factory over to a lights-out operation. To do so, it must acquire a fully automated machine. The machine will be able to produce an entire product line in a single operation. Projected annual net cash inflows from the machine are $180,000, and projected net income is $120,000. Why is the projected net income lower than the projected net cash inflows? Identify possible causes for the $60,000 difference.

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