To open a new store, Barker Tire Company plans to invest $480,000 in equipment expected to have a four year useful life and no salvage value Barker expects the new store to generate annual cash revenues of $630,000 and to incur annual cash operating expenses of $390,000 Barkers average income tax r...

Revenues 630000 Operating expenses 390000 Depreciation expense 120000 480000 ...

To open a new store, Barker Tire Company plans to invest $480,000 in equipment expected to have

Question:

To open a new store, Barker Tire Company plans to invest $480,000 in equipment expected to have a four-year useful life and no . Barker expects the new store to generate annual cash revenues of $630,000 and to incur annual cash operating expenses of $390,000. Barker’s average income tax rate is 30 percent. The company uses straight-line depreciation.
Required
Determine the expected annual net cash inflow from operations for each of the first four years after Barker opens the new store.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...