NARRBEGIN: FAR Corporation FAR Corporation

NARRBEGIN: FAR Corporation
FAR Corporation
FAR Corporation is considering a new project to manufacture widgets.The cost of the manufacturing equipment is $150,000.The cost of shipping and installation is an additional $15,000.The asset will fall into the 3-year MACRS class.The year 1-4 MACRS percentages are 33.33%,44.45%,14.81%,and 7.41%,respectively.Sales are expected to be $300,000 per year.Cost of goods sold will be 80% of sales.The project will require an increase in net working capital of $15,000.At the end of three years,FAR plans on ending the project and selling the manufacturing equipment for $35,000.The marginal tax rate is 40% and FAR Corporation's appropriate discount rate is 12%.
-Refer to FAR Corporation.What is the after-tax cash flow from selling the machine at the end of year 3?

A) -$9,554
B) $35,000
C) $9,554
D) $25,446