As regards new furnaces, the company has two alternatives. The first alternative is an electric furnace that costs $600,000 to buy and install. It has a useful life of 6 years. However, due to the relatively high costs of electricity, annual operating costs are estimated to be $140,000 per year in electricity and $20,000 per year in operator salaries. You determined that it is possible to use the accelerated depreciation schedule for the electric furnace and depreciate it straight-line over five years to the salvage value of zero. In fact, at the end of its useful life, you expect the electric furnace to have no value.
What is the pre-tax cash flow (after subtracting depreciation) of the electric furnace alternative in year 6 (date 6)? it is not -160,000