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samualson samualson
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Posts: 2459
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5 years ago
AFB Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to get the new lathe to the factory and get it installed. The old machine will be sold as scrap metal for $2,000. The new machine is also being depreciated on a straight-line basis over ten years. Sales are expected to increase by $8,000 per year while operating expenses are expected to decrease by $12,000 per year. AFB's marginal tax rate is 40%. Additional working capital of $3,000 is required to maintain the new machine and higher sales level. The new lathe is expected to be sold for $5,000 at the end of the project's ten-year life. What is the incremental free cash flow during years 2 through 10 of the project?
A) $13,600
B) $14,400
C) $15,800
D) $16,400
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DeanaRayDeanaRay
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5 years ago
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samualson Author
wrote...

5 years ago
Thank you, thank you, thank you!
AlahuKakpar
wrote...

Yesterday
I appreciate what you did here, answered it right Smiling Face with Open Mouth
choih94
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2 hours ago
Brilliant ツ
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