What are the operating cash flows in the first year

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Reference no: EM131878640

Your company plans to produce a product for two more years and then to shut down production. You are considering replacing an old machine used in production with a new machine. The Old machine originally cost $ 804 and was bought Three (3) years ago (i.e. it has depreciated for three years). It could be sold today for $ 363 or sold in two years for $ 122 . The New machine would cost $ 745 and could be sold in two years for $ 296 . The new machine is more efficient than the old machine and would reduce waste, and therefore the cost of materials, by $ 153 per year. Due to the lower waste, we could also have a one-time reduction in inventory of 23 . The firm's tax rate is 26 %. Both machines are in the 4 year MACRS class, with depreciation amounts of 15%, 45%, 33% and 7%. What are the Operating Cash Flows in the first year (Year 1) with the new machine? Show your answer to the nearest $.01 Do not use the $ symbol in your answer.

Reference no: EM131878640

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