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Use the following to answer the next three questions:
The Bryce Harper, Co. is considering the purchase of some new machinery. The new machinery costs $250,000. The machinery will be depreciated on a straight-line basis for five years, and it will be sold after five years for $8,650. The machinery will require the company to increase working capital by $10,500 which will be recovered at the end of the machinery's life. The machinery is not anticipated to increase revenues but it will save the company $150,000 in costs each year of the project's five-year life. The company has a 10% cost of capital and has a 20% tax rate.
What is the operating cash flow for this project in year 1?
Multiple Choice
$130,000
$120,000
$150,000
$110,000