Creighton Industries is considering the purchase of a new strapping machine which will cost $120,000, plus an additional $7,500 to ship and install. The new machine will have a 5-year useful life depreciated using the straight line method. The machine is expected to generate new sales of $25,000 per year and is expect to save $17,000 in labor and electrical expenses over the next 5 years. The machine is expected to have a salvage value of $30,000. Creightons's income tax rate is 40%. What is the projected cash flow of the machine for year 1?
A. $25.200
B.$13,300
C. $35,400
D.$ 9,900
C) $35,400
Business
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