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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![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcfd788e1-0b6f-4701-8dc5-cb11e28df5f3%2F4b3b61bf-d078-40f7-9467-e0317bed9ca9%2F4gxcevh.png&w=3840&q=75)
Transcribed Image Text: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
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