What is the incremental free cash flow during years

Assignment Help Finance Basics

Reference no: EM133376546

Question: AFB Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to get the new lathe to the factory and get it installed. The old machine will be sold as scrap metal for $2,000. The new machine is also being depreciated on a straight-line basis over ten years. Sales are expected to increase by $8,000 per year while operating expenses are expected to decrease by $12,000 per year. AFB's marginal tax rate is 40%. Additional working capital of $3,000 is required to maintain the new machine and higher sales level. The new lathe is expected to be sold for $5,000 at the end of the project's ten- year life. What is the incremental free cash flow during years 2 through 10 of the project

Reference no: EM133376546

Questions Cloud

Why do you think tfd owner decided to be honest : lease on a new set of equipment was inappropriately recorded as a debit to rent expense and credit to cash. The lease was signed at the beginning of 2022

Discuss how capital and regulatory requirements may limit : discuss how capital and regulatory requirements may limit the rise of digital banks at the expense of traditional institutions. Discuss at least one other

Why do rational investors seek efficient portfolios : Why do rational investors seek efficient portfolios and What is meant by the asset allocation decision? How important is this decision

Define emerging adulthood : Would you please define emerging adulthood? Should this be a lifespan period? Please defend your answer.

What is the incremental free cash flow during years : The new lathe is expected to be sold for $5,000 at the end of the project's ten- year life. What is the incremental free cash flow during years 2 through 10

List the most significant economical theories : List the most significant economical theories that can be useful in understanding the countries GDP and diversifying the income for a country.

Should be included in treatment for individuals with asd : Do you think psychotropic medications should be included in treatment for individuals with ASD?

Determine why funding is needed for the fortune 500 company : Determine why funding is needed for the Fortune 500 company "Costco". Determine the sources of funding. Consider self-funding, borrowing, equity, venture

What discount rate would make you indifferent : What discount rate would make you indifferent between receiving $3,820.00 per year forever and $5,408.00 per year for 28.00 years? Assume the first payment

User Account

All Pages