Considering the purchase of high-speed printing press

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Reference no: EM132062742

The Rare Find Corporation is considering the purchase of a high-speed printing press that has an invoice price of $350,000. The cost to ship the machine to the factory is $15,000, and the existing facilities will require modifications that are expected to cost $25,000. The machine will be depreciated on a straight-line basis over its useful life of 10 years, assuming no salvage value. The company is planning on paying for the machine using a line of credit at the bank that has an interest rate of 6 percent per year. The machine is expected to increase production and sales. Sales are expected to increase by $150,000 per year. Inventory and accounts receivable balances are expected to increase by $20,000 and $30,000 respectively. Expenses to operate the machine are $30,000 per year. The firm's marginal tax rate is 30%.

Calculate the operating cash flows in year 1. (Round to a whole number)

Calculate the initial cash outlay required to fund this project. (Round to a whole number)

Reference no: EM132062742

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