Nine Point Industries is trying to decide whether to invest in equipment to manufacture a ne product. If the investment project is accepted, sales revenue will increase by $94,000 per year and materials costs will decrease by $37,000 per year. The equipment will cost $148,000 and is depreciable over 8 years using simplified straight line (zero salvage value). The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project. Set your calculator to 4 decimal places and round to a whole number at the end. For example, if your answer is 1,000 enter it as 1000. DO NOT ENTER THE DOLLAR SIGN.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
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Nine Point Industries is trying to decide whether to invest in equipment to manufacture a new
product. If the investment project is accepted, sales revenue will increase by $94,000 per year
and materials costs will decrease by $37,000 per year. The equipment will cost $148,000 and is
depreciable over 8 years using simplified straight line (zero salvage value). The firm has a
marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project.
Set your calculator to 4 decimal places and round to a whole number at the end. For example, if
your answer is 1,000 enter it as 1000. DO NOT ENTER THE DOLLAR SIGN.
Transcribed Image Text:Nine Point Industries is trying to decide whether to invest in equipment to manufacture a new product. If the investment project is accepted, sales revenue will increase by $94,000 per year and materials costs will decrease by $37,000 per year. The equipment will cost $148,000 and is depreciable over 8 years using simplified straight line (zero salvage value). The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project. Set your calculator to 4 decimal places and round to a whole number at the end. For example, if your answer is 1,000 enter it as 1000. DO NOT ENTER THE DOLLAR SIGN.
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