Creederr Company is evaluating the proposed acquisition of a new machine. The machine will cost...
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Creederr Company is evaluating the proposed acquisition of a new machine. The machine will cost $190,000, and it will cost another $33,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class, and it will be sold after 3 years of use for $110,000. The machine will require an increase in net working capital of $9,000 and will have no effect on revenues, but is expected to save the firm $90,000 per year in before-tax operating costs, mainly labour. The company's marginal tax rate is 40%. What are the terminal year cash flows? MACRS Depreciation Rates
Year
3-Year
5-Year
1
33.33%
20.00%
2
44.45%
32.00%
3
14.80%
19.20%
Group of answer choices
$188,740
$102,649
$93,649
$148,820
$179,470
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