Question: Question 2 ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to

Question 2

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings, $100,000 in sales, increase $25,000 in inventory, increase 40,000 in account receivables, and increase $15,000 in notes payable. The press falls in the MACRS 5-year class (0.20, 0.32, 0.192. 0.1152, 0.1152, 0.0576) and it will have a salvage value at the end of the project of $85,000. The shop's tax rate is 35 percent and its discount rate is 11 percent. What is the terminal cash flow in year 5?

$253,323.8

$363,123.3

$193,350.4

$163,400.5

$263,223.8

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Close Window A Moving to another question will save this response. >> Question 35 1 points Save Answer ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a...

Q:

1. The below information is to answer the next 6 question ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated...

Q:

1. The below inf ormation is to answer the next 6 question ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570 ,0 00 is...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

ABC Machine Shop is considering a 5-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $90,000 in annual pretax cost savings,...

Q:

In the light of the Ricardian model, how might you evaluate the claim by developing countries that they are at a disadvantage in trade with powerful industrialized countries?

Q:

Question 5 Merchants of Doubt. The tobacco industry wanted the public and the federal government to ignore the preponderance of evidence and believe that there was still a scientific controversy over...

Q:

Today, you invest a lump sum amount in an equity fund that provides an 12% annual return. You would like to have $11,500 in 6 years to help with a down payment for a home. How much do you need to...

Q:

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".