What are the annual after-tax cash flows associated with


?(New project analysis?) Raymobile Motors is considering the purchase of a new production machine for ?$600,000. The purchase of this machine will result in an increase in earnings before interest and taxes of ?$150,000 per year. To operate this machine? properly, workers would have to go through a brief training session that would cost ?$35,000 after taxes. It would cost ?$7,000 to install the machine properly.? Also, because the machine is extremely? efficient, its purchase would necessitate an increase in inventory of ?$40,000. This machine has an expected life of 10 ?years, after which it will have no salvage value. Assume simplified? straight-line depreciation and that this machine is being depreciated down to? zero, a 31 percent marginal tax? rate, and a required rate of return of 17 percent. a. What is the initial outlay associated with this? project? b. What are the annual? after-tax cash flows associated with this project for years 1 through? 9? c. What is the terminal cash flow in year 10 ?(what is the annual? after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the? project)? d. Should the machine be? purchased?

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Financial Management: What are the annual after-tax cash flows associated with
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