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Creederr Company is evaluating the proposed acquisition of a new machine. The machine will cost...

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Finance

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

Answer & Explanation Solved by verified expert
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