Question: Zeon, a large profitable corporation, is considering adding some automatic equipment in its production facilities. An investment of exist500,000 will produce an initial annual benefit

Zeon, a large profitable corporation, is considering adding some automatic equipment

Zeon, a large profitable corporation, is considering adding some automatic equipment in its production facilities. An investment of exist500,000 will produce an initial annual benefit of exist143, 500, but the benefits are expected to decline exist3,000 per year. The firm uses Straight-Line depreciation, a 4 year useful life and exist42,000 salvage value. Assume that the equipment can be sold for its exist42,000 salvage value at the end of 4 years. Also assume a 46% income tax rate for state and federal taxes combined. The following After-Tax Cash Flow Table has been prepared. Is it correct? If not, why not? It is correct. It is incorrect. Wrong depreciation used. It is incorrect. The money made when the equipment is sold in not included in the last year's cash flow. It is incorrect. The after-tax cash flow is wrong

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