3- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the OCF (operating cash flow) for year 2 for this project? 4- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the terminal cash flow for this project?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...
Question
3- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the OCF (operating cash flow) for year 2 for this project?
4- BROWN Co. is determining whether they should purchase a new
machine. The machine cost is $380,000, installation costs are $20,000.
MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for
this 3 year project is $160,000, $230,000, $100,000 respectively. The
machine could be sold at the end of the 3 years for $60,000. What is
the terminal cash flow for this project?
Transcribed Image Text:3- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the OCF (operating cash flow) for year 2 for this project? 4- BROWN Co. is determining whether they should purchase a new machine. The machine cost is $380,000, installation costs are $20,000. MACRS 3 years. Tax rate 30% WACC 12%. The expected EBITDA for this 3 year project is $160,000, $230,000, $100,000 respectively. The machine could be sold at the end of the 3 years for $60,000. What is the terminal cash flow for this project?
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