Builtrite is considering the purchase of a new five-year machine worth $90,000. It will cost another...

 

Transcribed Image Text:

Builtrite is considering the purchase of a new five-year machine worth $90,000. It will cost another $20,000 to install the machine and Builtrite will need to keep an extra $7,000 in inventory on hand due to the machine's efficiency. The current machine being used is 5 years old and originally cost $60,000 and is being depreciated down to zero over a 10-year period. If the current machine were sold today, it could be sold for $45,000. In four years, the new machine is estimated to have a salvage value of $32,000. Two employees will need to be trained for the new machine at a cost of $4000. The new machine is expected to produce $80,000 in annual savings. Builtrite is in the 34% tax bracket. What is the terminal cash flow for the new machine at the end of year 4? Builtrite is considering the purchase of a new five-year machine worth $90,000. It will cost another $20,000 to install the machine and Builtrite will need to keep an extra $7,000 in inventory on hand due to the machine's efficiency. The current machine being used is 5 years old and originally cost $60,000 and is being depreciated down to zero over a 10-year period. If the current machine were sold today, it could be sold for $45,000. In four years, the new machine is estimated to have a salvage value of $32,000. Two employees will need to be trained for the new machine at a cost of $4000. The new machine is expected to produce $80,000 in annual savings. Builtrite is in the 34% tax bracket. What is the terminal cash flow for the new machine at the end of year 4?

Answer rating: 100% (QA)

Answer how to calculate the terminal cash flow for the new machine at the end of year 4 for Builtrit... View the full answer