What is the initial cash flow for the project

Reference no: EM13220126

A new machine is to be purchased for $150,000. The company believes it will generate $60,000 annually in revenue due to the purchase of this machine. The company will have to train an operator to run this machine and this will result in additional labor expenses of $20,000 annually. The new machine will be depreciated using 5 years MACRS, even though the life of the project is 7 years, and the salvage value will be $25,000 at the end of year 7. The tax rate is 40% and the company's MARR is 12%. What is the initial cash flow (at time=0) for this project?

Reference no: EM13220126

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