What is the operating cash flow in year two

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Reference no: EM131610055

The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new machine. The machine's price is $60,000, and it falls into the MACRS 3-year class. Purchase of the machine would require an increase in net operating working capital of $2,000. The computer would increase the firm's before-tax revenues by $25,000 per year but would also increase operating costs by $14,000 per year. The machine is expected to be used for 3 years and then be sold for $12,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. What is the operating cash flow in Year 2? Round it to a whole dollar, and do not include the $ sign.

Reference no: EM131610055

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