Six years ago, Nemrow Inc. purchased a polishing machine for $600,000. The company expected to use the
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- Six years ago, Nemrow Inc. purchased a polishing machine for $600,000. The company expected to use the machine for 10 years with no residual value at the end of the tenth year. The machine has been generating annual cash revenue of $460,000 and incurring annual cash operating costs of $210,000. Nebrow is considering the purchase of a new digital-polishing machine for $800,000, which will have annual cash revenues of $690,000 and annual cash operating costs of $180,000. The new machine is expected to have a useful life of four years. The company uses the straight-line depreciation method with no salvage value to depreciate all of its assets. Assume, for purposes of analysis that Nemrow is subject to a combined 40% tax rate.
- What is the annual incremental after-tax cash flow from the new polishing machine?
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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