moore co. is considering the acquisition of a new machine costing $105000. it is estimated that the machine will have a 10 year life and scrap value of $5000. over its life the machine is expected to produce 2000 units each year with a sales price per unit of $500 and combined with material and labour costs $450 per unit. capital allowance are available on straight line basis cost over 5 years. moore has a 40% tax rate and the tax is paid in the year of returns. what is the post tax cash flow for tenth year of the project?
a. $81000
b.$68400
c.$ 63000
d. $60000
sir how can i do this ......ans: $63000
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investment appraisal mcq
7y ago#1The cash flows at time 10 is arrived at as follows:
Net operating inflow: 2,000 x (500 -450) = 100,000
Tax on operating flow: 40% x 100,000 = (40,000)
Scrap proceeds: 5,000
Tax on balancing charge: 40% x 5,000 = (2,000)
Giving a net cash flows of $63,000
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thank you very much sir!!!
7y ago#3You are welcome :-)
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