Zencorp is considering buying a $220,000 production machine. It would be depreciated (simplified straight line) for 10 years. This investment would allow the firm to increase sales by $130,000 per year. Operating expenses would increase by $80,000 per year also. The corporate tax rate is 21%. What is the annual cash flow for the project? O $75,720 O $44,120 O $170,520 O $71,100 O $53,720
Zencorp is considering buying a $220,000 production machine. It would be depreciated (simplified straight line) for 10 years. This investment would allow the firm to increase sales by $130,000 per year. Operating expenses would increase by $80,000 per year also. The corporate tax rate is 21%. What is the annual cash flow for the project? O $75,720 O $44,120 O $170,520 O $71,100 O $53,720
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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