Answer to Question #267501 in Economics for Happy

Question

Choice 1 A machine is purchased for 60,000. It is a 5 year property class. It will be used for 10 years after which it will have a salvage value of 15,000 It is mostly grey with a metallic cover

The Before Tax Cash Flow will be 80,000 per year. The machine is purchased from Retained Earning cash

outright. It has no extra deductions associated with it

Choice 2 A machine is purchased for 65,000. It is a 10 year property class nhject. It will b used for 12 years with a salvage value of 18,000 it is mostly bice with a white cover. The Before Tax Cash Flow will be 86.000 per year. The machine is purchased from Retained Earnings Cash Outright. It receivers an additional allowance for environmental effects of 5000/yr. The allowance is not taxed and is not included in the 86.000 BTCF

Only one response below is correct

Which of the following statements is true in the third year of operation?

The After Tax Cash Flow of choice 1 exceeds choice 2

Answer 1

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