Company XYZ is going to make an investment for a 4 year project. During this investment,...

 

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Company XYZ is going to make an investment for a 4 year project. During this investment, they are going to buy a new machine at a price of $30,000. The machine is going to be depreciated according to 3-Year MACRS. Each year, the investment brings revenue of $26,000 and the annual operating & manufacturing expenses is $11,000. The working capital requirement is $2,000 and the average tax rate is 40%. Partial cash flow information of this investment is given below: Income Statement (No Inflation) Revenue Expenses 0&M Depreciation Taxable income Income Taxes (40%) Net Income Cash Flow Operating Activities Net Income Depreciation Investing Activities Machine Working Capital Net Cash Flow ($30,000) ($2,000) 7 ? $26,000 $11,000 $10,000 $26.000 $11,000 $13,333 $26,000 $11,000 $4,445 ? ? ? $26,000 $11,000 $2,222 $2,000 Company XYZ is going to make an investment for a 4 year project. During this investment, they are going to buy a new machine at a price of $30,000. The machine is going to be depreciated according to 3-Year MACRS. Each year, the investment brings revenue of $26,000 and the annual operating & manufacturing expenses is $11,000. The working capital requirement is $2,000 and the average tax rate is 40%. Partial cash flow information of this investment is given below: Income Statement (No Inflation) Revenue Expenses 0&M Depreciation Taxable income Income Taxes (40%) Net Income Cash Flow Operating Activities Net Income Depreciation Investing Activities Machine Working Capital Net Cash Flow ($30,000) ($2,000) 7 ? $26,000 $11,000 $10,000 $26.000 $11,000 $13,333 $26,000 $11,000 $4,445 ? ? ? $26,000 $11,000 $2,222 $2,000

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