Question

1. You purchased a machine for $ 1.16 million three years ago and have been applying​ straight-line depreciation to zero for a​ seven-year life. Your tax rate is 38 %. If you sell the machine today​ (after three years of​ depreciation) for $ 775 000​ what is your incremental cash flow from selling the​ machine? Your total incremental cash flow will be ​$ nothing. ​(Round to the nearest​ cent.)

2. Daily Enterprises is purchasing 10.3 million machines. It will cost 54,000 to transport and install the machine. The machine has a depreciable life of five years using​ straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of:

3. You have just completed a 15,000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $97,000​, and if you sold it​ today, you would net 110,000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $30,000 plus an initial investment of $4,700 in inventory. What is the correct initial cash flow for your analysis of the coffee shop​ opportunity?

Identify the relevant incremental cash flows​ below:  ​(Select all the choices that​ apply.)

These are the correct answers :

A. Capital expenditure to outfit the space.

C. The amount you would net after taxes should you sell the space today.

E.The initial investment in inventory.

I need an answer to this part :

Calculate the initial cash flow​ below:  ​(Select from the​ drop-down menus and round to the nearest​ dollar.)

1	Capital Expenditure (outfit of space). . . .	$
2	Capital Expenditure (the price of space). . . .	$
3	Feasibility Study Cost. . . . . . . . . . . . . . . .	$
4	Free Cash Flow	$

Answer 1

Question 1-

Depreciation as per SLM - purchase price - scrap value/ usefull life .

$1160000-0 /7 = $ 165714

Depreciation for past 3 years= $165714× 3 =$497142

So , the book value of machine on date of sale that is today ----- purchase price - accumulated depreciation

$1160000-$497142 = $662858

Gain on sale ----- selling price - book value

775000-662858 = 112142

Now, tax on gain is - $112142× 38% = 42614

So the incremental cash flow from selling the machine = gain - tax

112142-42614 = $69528

Since , you have asked multiple questions, we will solve the first for you, i have explained well ques 1 . Please feel free to ask any doubt by leaving a comment in comment box. Thank you !!