Jim is a financial analyst who is hired to analyze a project for Mays Company. Mays is
Question:
Jim is a financial analyst who is hired to analyze a project for Mays Company. Mays is considering uses a new machine to replace the one bought 4 years ago, which was bought for 2million. The old machine can be sold for 1.2 million. The new machine is 2 million as well and increases 0.2 million net operating working capital when the machine is installed. After using the new machine, the annual operating is predicted to decrease by 0.3million. Eleven years later, the firm will sell the machine and end the project. Jim predicts that the salvage value will be 0.2 million. The tax rate is 25%. And all the machines are fully depreciated when they are purchased.
Find the last year cash flow of the project?
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell