Question 1 1 pts Purple Haze Machine Shop is considering a four-year project to

Question

Question 1 1 pts Purple Haze Machine Shop is considering a four-year project to improve its production efficiency Buying a new machine press for $596093 is estimated to result in $210087 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $98008. The shop's tax rate is 34 percent. What is the OCF for year 4? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.) Modified ACRS Depreciation Allowances (Table 10.7) Year Three-Year Five-Year Seven-Year 33.33% 44.45 14.81 7.41 20.00% 32.00 19.20 11.52 11.52 5.76 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 2 4 6 7 8

Explanation / Answer

EBDT $     210,087 Less: Depreciation $        68,670 596093*0.1152 Profit before tax $     141,417 Less: Tax @ 34% $        48,082 Net income $        93,335 Add: Depreciation $        68,670 Year 4 cash flows $     162,005

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