Evaluate the proposed acquisition of a new special-purpose

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Reference no: EM13911715

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $320,000. The truck falls into the MACRS 10-year class, and it will be sold after 10 years for $57,000. Use of the truck will require an increase in NWC (spare parts inventory) of $5,700. The truck will have no effect on revenues, but it is expected to save the firm $68,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 35 percent. What will the cash flows for this project be during year 3?

$14,248 $90,280 $60,328 $32,000

Reference no: EM13911715

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