Ella Inc. is considering purchasing a new milling machine. The new machine costs $127,340, plus installation fees of $13,554 and will generate revenue of $2,803,104 per year and cost of good sold of $1,546,605 over its 7-year life. The machine will be depreciated on a straight-line basis over its 7-year life to an estimated salvage value of 0. Mystic’s marginal tax rate is 0%. Mystic will require $31,897 in NWC if the machine is purchased. Determine the annual operating cash flow in if the machine is purchased. round your answer to two decimals.
|Annual depreciation =||20127.71429|
|Computation of annual operating cash flow|
|iv||Profit before tax||1,236,371.29|
|vii=vi+iii||Operating cash flow||1,256,499.00|
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