104) Boric Company is considering the purchase of a new acid-producing machine. It will cost $360,000, and it will last for 12 years with a zero terminal salvage value at the end of that time.

The equipment is expected to increase revenues by $40,000 per year, but additional cash outlays to operate the equipment will equal $24,000 per year.

Required: Calculate the total annual net after-tax cash flow generated by using the machine. Use straight-line amortization and a tax rate of 25 percent.

105) WN Company manufactures high quality Wagnuts. It is a growing company and is therefore considering the purchase of some new equipment to help expand production. The following data are relevant to the decision:

Cost of new equipment$850,000

Resulting annual increase in revenue$100,000

Additional annual cash expenses$30,000

Terminal salvage value-0-

Amortization method30%

Tax rate15%


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