ABC, Inc. purchased an equipment at time=0 for $52,504. The shipping and installation costs were $6,270. The equipment is classified as a 5-year MACRS property. The investment in net working capital at time=0 was $7,732 which would be recouped at the end of the project. The project life is 4 years. At the end of the 4th year, the company will sell the equipment for $13,114. The annual cash flows are $43,345. 

What is the cash flow of the project in Year 4? 

That is, solve for CF₄. 

Assume that the tax rate is 12%

The MACRS allowance percentages are as follows, starting with Year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow

Answer rating: 100% (QA)

Total cash flow in the last year 6374732 Stepbystep explanation Total co... View the full answer