Minolta Machine Shop just purchased a computer-controlled vertical drillpress for $100,000. The drill press is classified as a three-year MACRS property. Minolta is planning to use the press for five years. Then Minolta will sell the press at the end of its service life for $20,000. The annual revenues are estimated to be $110,000. If the estimated net cash flow at the end of year 5 is $30,000, what are the estimated operating and maintenance expenses in year 5? Minolta's income tax rate is 40%.(a) $60,000(b) $65,000(c) $80,000(d) $88,333
Minolta Machine Shop just purchased a computer-controlled vertical drillpress for $100,000. The drill press is classified as a three-year MACRS property. Minolta is planning to use the press for five years. Then Minolta will sell the press at the end of its service life for $20,000. The annual revenues are estimated to be $110,000. If the estimated net cash flow at the end of year 5 is $30,000, what are the estimated operating and maintenance expenses in year 5? Minolta's income tax rate is 40%.(a) $60,000(b) $65,000(c) $80,000(d) $88,333
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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Minolta Machine Shop just purchased a computer-controlled vertical drill
press for $100,000. The drill press is classified as a three-year MACRS property. Minolta is planning to use the press for five years. Then Minolta will sell the press at the end of its service life for $20,000. The annual revenues are estimated to be $110,000. If the estimated net cash flow at the end of year 5 is $30,000, what are the estimated operating and maintenance expenses in year 5? Minolta's income tax rate is 40%.
(a) $60,000
(b) $65,000
(c) $80,000
(d) $88,333
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