Bonding machine for producing its number one line of crayons

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Reference no: EM131905400

The Munsell Colour Company is considering the purchase of a new batch polymerminus−bonding machine for producing its number one line of crayons. Although the machine being considered will not produce any increase in sales? revenues, it will result in the beforeminus−tax reduction of labour costs by? $200,000 per year. The machine has a purchase price of? $250,000, and it would cost an additional? $10,000 to install the machine. In? addition, to operate this? machine,inventory must be increased by? $15,000. The machine is categorized as 10minus−year property. After 2? years, it can be sold for? $150,000. The tax rate is? 34% and the cost of capital is? 15%. What are the operating cash flows at the end of Year? 1?

Reference no: EM131905400

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