Write down operating cash flows in first year


Your company plans to make product for two more years and then to shut down production. You are thinking of  replacing old machine used in production with the new machine. Old machine originally cost $552 and was bought Three (3) years ago (i.e. it has decreased for three years). It could be sold today for $330 or sold in two years for $66. New machine would cost $556 and could be sold in two years for $227. New machine is more efficient than old machine and would decrease waste, and hence cost of materials, by $179 per year. Due to lower waste, we could also have one-time reduction in inventory of 17. Firm's tax rate is 41%. Both machines are in 4 year MACRS class, with depreciation amounts of 15%, 45%, 33% and 7%. Write down Operating Cash Flows in first year (Year 1) with new machine?

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Project Management: Write down operating cash flows in first year
Reference No:- TGS032306

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