What are the cash flows related to the acquisition

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Reference no: EM131313169

The Pittsburgh Steel Company is considering two different wire soldering machines. Machine 1 has an initial cost of $100,000, costs $20,000 to set up, and is expected to be sold for $20,000 after 10 years. Machine 2 has an initial cost of $80,000, costs $30,000 to set up, and is expected to be sold for $10,000 after 10 years. Both machines would be depreciated over 10 years using straight-line depreciation. The company Pittsburgh has a tax rate of 35%.

a. What are the cash flows related to the acquisition of each machine?

b. What are the cash flows related to the disposition of each machine?

Reference no: EM131313169

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