1. Dexter Chemicals purchased a hexagromic insulator 10 years ago for $120,000. It depreciates in a straight line over 15 years to an estimated salvage value of zero. If it can be sold today for $10,000. Dexter is considering purchasing a new, more efficient isolator that would cost $270,000 to install and depreciate at a rate of 10% per year. The company's marginal tax rate is 40%. If the new isolator is purchased, it is estimated that annual revenue will increase by $10,000 and annual expenses will decrease by $10,000. 
2. 
   
3. What will be the estimated after-tax operating cash flow in year 1 if the new isolator is purchased?

Answer rating: 100% (QA)

To calculate the estimated aftertax operating cash flow in year 1 if the new isolator is purchased w... View the full answer