A Drill Press Costs $30,000 and Is Expected to Have

Multiple Choice

A drill press costs $30,000 and is expected to have a 10 year life.The drill press will be depreciated on a straight-line basis over 10 years to a zero estimated salvage value.This machine is expected to reduce the firm's cash operating costs by $4,500 per year.If the firm is in the 40 percent marginal tax bracket, determine the annual net cash flows generated by the drill press.

A) $4,500
B) $900
C) $5,700
D) $3,900