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The Mountain Jam Company purchased a machine 5 years ago for$70,000. It has an estimated l

The Mountain Jam Company purchased a machine 5 years ago for$70,000. It has an estimated l

The Mountain Jam Company purchased a machine 5 years ago for$70,000. It has an estimated life of 7 years from the time ofpurchase and is expected to have zero salvage value at the end of7th year. The old machine can be sold today for $60,000.A new machine can be purchased for $69,300. It has a 2-year lifeand is expected to reduce operating expenses by $50,000 per year.Sales aren't expected to change. After 2 years, the new machine canbe sold for $20,000. The company uses the straight-line method tocalculate depreciation for both machines. The tax rate is 40%. Whatis the initial cash flow for the project?

 

 

-$69,300

 

 

-$9,300

 

 

-$25,300

 

 

-$33,300

 

 

$60,000

Abhinav 02-Dec-2019

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