Crossroad Corporation is trying to decide whether to invest to automate a production line. If the project is accepted, labor costs will decrease by $753,000 per year. However, other cash operating expenses will increase by $216,000 per year. The equipment will cost $105,000 and is depreciable over 9 years using simplified straight line to a zero salvage value. Crossroad will invest $24,000 in net working capital at installation. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows associated with the new project.

The incremental revenue the company gets is:

= Labor cost decrease - Other cash increase

= 753,000 - 216,000

= $537,000

Depreciation = 105,000/ 9

= $11,667

Annual Cashflows (Year 1 - 9)

= (Incremental revenue - Depreciation) * ( 1 - tax) + Depreciation

= (537,000 - 11,667) * (1 - 34%) + 11,667

= $‭358,386.78‬

Cashflow in year 0

= Cost of equipment + Investment in net working capital

= -105,000 - 24,000

= -$129,000

answer; /// multipotentialite means a person who have many different interests and creative pursuits in life; (one true calling);

polymath; means a person   of wide-ranging knowledge or learning;

scanner; means; a device that captures images from photographic prints,posters,magazine pages.ect;

consumer credit. an advantage is that it allows consumers to afford expensive goods and services now, increasing their standard of living. however, a disadvantage is that it creates a trap for debt, if people do not have self control, they may see themselves filing personal bankruptcy.