What are the annual after-tax cash flows associated


Weir's Trucking, Inc. is considering the purchase4 of a new production machine for $105,000. The purchase of this new machine will result in an increase in earnings before interest and taxes of $26,000 per year. To operate this machine properly, workers would have to go to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $24,000. This machine has an expected life of 10 years, after which it will have no salvage value. Finally, to purchase the new machine, it appears that the firm would have to borrow $90,000 at 10% interest from its local bank, resulting in additional interest payments of $9,000 per year. assume simplified straight-line depreciation, thta this machine is being depreciated down to zero, a 36% marginal tax rate, and a required rate of return of 14% a. What is the initial outlay associated with this project? b. What are the annual after-tax cash flows associated with this project for years 1 through 9?

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Accounting Basics: What are the annual after-tax cash flows associated
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