What are the year three cash flows

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Net Cash Flows year 3: Replace old asset that cost $30,000 with new asset that costs $80,000 and will be depreciated on a 7 year MACRs table. Old asset has book value of $10,000 and will sell for $4,000. Old asset was being depreciated straight line at $3,000 per year. Revenues to increase by $34,000 and operating expenses to increase by $12,500. What are the year 3 cash flows? Assume a 35% tax rate and a rounded 3rd year MACRs rate of 18% 18. Net Cash Flows year 2: Old asset is 3 years old and was purchased for $50,000 and is depreciated over the 7 year MACRs schedule. New asset costs $165,000 and will save $62,000 in operations costs. The new asset will also use the 7 year MACRs table. Marginal tax rate is 45%. MACRs schedule: 14%, 25%, 18%, 12%, 9%, 9%, 9%, 4%.

Reference no: EM131448328

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