You are analyzing the prospects of installing cost saving machinery. You have the following information:
- On a yearly basis the machinery generated a savings of $38,000 which led to an increase in taxes of $4,000. The space used by the machinery was lost, leading to loss of rent (post tax) of $8,000.
- (Hint: Here you don't need to know Depreciation (which is needed for calculating taxes) or the tax rate. You are told what the taxes are. )
What will be the net increase in cash flows per year from installing the machinery