ABC purchased a $20,000,000 machine The machine will be depreciated by $4,000,000 per year over 5 years, starting this year Suppose ABC is paying 30 tax rate Assuming no other changes, which of the following will be CORRECT ABCs earnings for the year will be lower by $20 million, and its cash flow for the year will be higher by $4 million ABCs earnings for the year will be lower by $4 million and its cash flow for the year will be higher by $4 million ABCs earnings for the year will be lower by $2 8 million, and its cash flow for the year will be higher by $2 8 million ABCs earnings for the year will be lower by $2 8 million, and its cash flow for the year will be higher by $1 2 million ABCs earnings for the year will be lower by $2 8 million, and its cash flow for the year will be lower by $1 2 million

The Answer is in the image, click to view ...

Question: ABC purchased a $20,000,000 machine. The machine will be depreciated by $4,000,000 per year over 5 years, starting this year. Suppose ABC is paying 30%

ABC purchased a $20,000,000 machine. The machine will be depreciated by $4,000,000 per year over 5 years, starting this year. Suppose ABC is paying 30% tax rate. Assuming no other changes, which of the following will be CORRECT?

ABCs earnings for the year will be lower by $20 million, and its cash flow for the year will be higher by $4 million.
ABCs earnings for the year will be lower by $4 million and its cash flow for the year will be higher by $4 million.
ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be higher by $2.8 million.
ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be higher by $1.2 million.
ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be lower by $1.2 million.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Are most stocks traded on face-to-face exchanges or electronically? What impact has this had on retail stock transactions? On portfolio management?

Solve all questions.,,, 1.1.Lease or BuyMets nuclear research laboratory is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive high-tech equipment). The scanner...

Question | Correct Mark 1.00 out of .00 V" Flag question A firm is considering the following independent projects. Present value of Project Investment future cash flows NPV A $183 $247 $64 B $156...

20. Gentleman Ltd revealed the following balances for the year ended 30 June 2019. Account receivable balance was $200,000 net of allowance for doubtful debts. During the year ended 30 June 2019,...

undefined Excel Online Structured Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $110,000, and it would cost...

Hello- I need help on the output area below (yellow highlighted boxes). I tried but keep mixing up the formulas and I dont think they are all correct. Please help! Chapter 4 The MBA Decision Complete...

the green blanks are suppose to be the answere You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $260,000, and it would cost another $52,000 to...

Videa Excel Online Structured Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the Rap department. The base price is $230,000, and it would cost another...

Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $200,000, and it would cost another $40,000 to modify the equipment...

Bried Exercises 10-13 201. McDonald's Corporation reports total averape assets of $28.9 Life Discuss the implications this has for comparing the results of the billion and net sales of $205 billion....

6.1. An engineer is interested in the effects of cutting speed (A), tool geometry (B), and cutting angle (C) on the life (in hours) of a machine tool. Two levels of each factor are chosen, and three...

The electric field of an EM wave is given by Ez = Em sin (kywt+p/6), Ex=0, and Ez = 0. (a) In what direction is this wave traveling? (b) Write expressions for the components of the magnetic field of...

All else being equal, a CC - rated bond has less interest rate risk than a BB - rated bond. True False

What is the main purpose of a database? A . To store data. B . To manipulate data. C . To organize data. D . All of the above.

What was the Net Income value for AAPL in 2020? (Round to the nearest million dollars.)

What direction is cost of revenue trending for GE?

Change the values in your test formula. What is the Net Income for NKE in 2020? (Round to the nearest million dollars.)