Martingale Corporation is considering a 3-year project. All the fixed assets necessary for this project are classified
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Martingale Corporation is considering a 3-year project. All the fixed assets necessary for this project are classified as 3-year proportion for MACRS. What is the net salvage cash flow of the sales of the fixed assets when this project is over?
Initial Investment | $2,000,000 |
Annual Sales | $1,550,000 |
Annual Operating Costs | $500,000 |
Initial Increase in NWC | $750,000 |
Resale value of fixed assets | $185,000 |
Tax Rate | 21% |
Discount Rate | 10% |
Year 0 | Year 1 | Year 2 | Year 3 | |
Initial Investment | 2,000,000 | |||
Revenue | 1,550,000 | 1,550,000 | 1,550,000 | |
Operating Costs | 500,000 | 500,000 | 500,000 | |
Depreciation | 666,600 | 889,000 | ????? | |
EBT | 383,400 | 161,000 | 753,800 | |
Tax | 80,514 | 33,810 | 158,298 | |
NET INCOME | 302,886 | 127,190 | 595,502 | |
Operating cash flow | 969,486 | 1,016,190 | ???? | |
Net capital Spending | (2,000,000) | ???? | ||
△ in NWC | (750,000) | 750,000 | ||
INCREMENTAL CASH FLOW | (2,750,000) | 969,486 | 1,016,190 | ???? |
Related Book For
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham
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