Quip Corporation wants to purchase a new machine for $320,000. Management predic

Question

Quip Corporation wants to purchase a new machine for $320,000. Management predicts that the machine will produce sales of $210,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $85,000 per year. The firm uses the straight-line depreciation and expects the machine to have a residual value of $54,000. Quip's combined income tax rate, t, is 40.00%. The required rate of return is 10.00% What is the net after-tax cash inflow in Year 1 from the proposed investment?   $76,280 $96,280 $108,280 $100,280 $114,280 Quip Corporation wants to purchase a new machine for $320,000. Management predicts that the machine will produce sales of $210,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $85,000 per year. The firm uses the straight-line depreciation and expects the machine to have a residual value of $54,000. Quip's combined income tax rate, t, is 40.00%. The required rate of return is 10.00% What is the net after-tax cash inflow in Year 1 from the proposed investment?   $76,280 $96,280 $108,280 $100,280 $114,280

Explanation / Answer

$96,280

Sales 210,000 less: Expenses -85,000 less: Depreciation -53200 EBIT 71,800 Tax at 40% -28,720 EAT 43,080 add: Depreciation 53,200 Net after tax cash inflow 96,280

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---