Question: The following problem will be used to answer the next three questions. Elsinore Company is considering the purchase of a new brewing equipment. The new

 The following problem will be used to answer the next three

The following problem will be used to answer the next three questions. Elsinore Company is considering the purchase of a new brewing equipment. The new brewing equipment will be depreciated using the straight-line depreciation over 5 years to a SV of $20,000. The equipment has an estimated life of 5 years, it costs $200,000, and Elsinore plans to sell the brewing equipment at the end of the fifth year for $20,000. The new brewing equipment is expected to generate new sales of $50,000 per year and the firm's costs will go up by $2,000 per year. In addition, the company will need to increase inventory by $20,000 and accruals will also increase by $15,000. The company's tax rate is 20 percent. (Numbers in parentheses are negative) 9. What would be the cash flow from assets (CFFA) at t=0? a) ($165,000) ($200,000) ($205,000)** ($220,000) ($235,000) 10. What would be the operating cash flow in year 1 (t=1) a) $44,800 b) $45,600** c) $43,200 $50,400 $47,200

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