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Sagot :
Answer:
The incremental revenue the company gets is:
= Labor cost decrease - Other cash increase
= 753,000 - 216,000
= $537,000
Depreciation = 105,000/ 9
= $11,667
Annual Cashflows (Year 1 - 9)
= (Incremental revenue - Depreciation) * ( 1 - tax) + Depreciation
= (537,000 - 11,667) * (1 - 34%) + 11,667
= $358,386.78
Cashflow in year 0
= Cost of equipment + Investment in net working capital
= -105,000 - 24,000
= -$129,000
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