Regal Company is considering the purchase of a new embroidering machine. It is expected to generate additional sales of RM400,000 per year. The machine will cost RM295,000, plus RM3,000 to install it. The embroiderer will save RM12,000 in labor expense each year. Regal is in the 34 percent income tax bracket. The machine will be depreciated on a straight-line basis over five years (it has no salvage value). The embroiderer will require annual operating expenses of RM136,000. What is the annual operating cash flow that the machine will generate?

Select one:

a. RM316,954

b. RM124,000

c. RM202,424

d. RM165,816

Answer rating: 100% (QA)

c RM202424 Explanation The annual operati... View the full answer