What will cash flows for this project be during year three

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Reference no: EM131051562

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $430,000. The truck falls into the MACRS 7-year class, and it will be sold after 7 years for $68,000. Use of the truck will require an increase in NWC (spare parts inventory) of $6,800. The truck will have no effect on revenues, but it is expected to save the firm $122,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent. What will the cash flows for this project be during year 3?

A) $148,407

B) $61,429

C) $103,283

D) $28,076

Reference no: EM131051562

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