Business, 08.04.2020 05:02 maljoh8249

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The company already spent $15,000 (i. e., sunk cost) in last year to improve the production line site. The truck's basic price is $90,000, and it will cost another $10,000 to modify it for special use by your firm. Use of the truck will require an increase in net operating working capital (spare parts of inventory) of $25,000. The truck falls into the MACRS 3 year class, and it will be sold after three years for $20,000 (salvage value). The truck will increase the sale by $200,000, and the cost of all expenses will be 40% of sales. The firm's marginal tax rate is 40 percent. What is the operating cash flow in Year 1

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