a) Loius Laine is considering replacing its aging telephone system with state of the art voice activated system. The new system is expected to save the company 2,000 per month by eliminating the current operator's salary. With a cost of 100,000 and a ten-year life, the system will be depreciated at a rate of 10,000 per year.

Required

The 10,000 in depreciation will be included in the project's cash flow analysis?

Answer 1

Choose...True or False

b)Triple M is exploring the purchase of a new piece of equipment. If the equipment is purchased, the company will pay 5,000 to upgrade the production line's electrical wiring.

Required

In determining the cash flows associated with the new equipment, the 5,000 payment will be

Answer 2

Choose...

a. considered a cash inflow in the year of occurrence

b. considered a cash inflow at the time the new equipment is purchased

c. considered a cash outflow at the time the new equipment is purchased

d. ignored in the cash flow analysis