2. Incremental costs - Initial and terminal cash flow Consider the case of Alexander Industries: Alexander Industries is considering a project that requires an investment in new equipment of $3,360,000. Under the new tax law, the equipment is eligible for 100% bonus depreciation at t=0 so the equipment will be fully depreciated at the time of purchase. Alexander estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals). The company's tax rate is 25%. The after-tax cost of Alexander's new equipment is Alexander's initial net investment outlay is Suppose Alexander's new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net operating working capital (NOWC) investment. Remember, that under the new tax law, this equipment was fully depreclated at t=0. If the firm's tax rate is 25%, what is the project's total termination cash flow? $434,000$150,000$200,000$534,000 2. Incremental costs - Initial and terminal cash flow Consider the case of Alexander Industries: Alexander Industries is considering a project that requires an investment in new ec $3,360,000. Under the new tax law, the equipment is eligible for 100% bonus depi so the equipment will be fully depreciated at the time of purchase. Alexander estim accounts receivable and inventories need to increase by $640,000 to support the n some of which is financed by a $256,000 increase in spontaneous liabilities (accour accruals). The company's tax rate is 25%. The after-tax cost of Alexander's new equipment is Alexander's initial net investment outlay is Suppose Alexander's new equipment is expected to 100 at the end of it useful life, and at the same time, the firm expects to recover all of its net operating (NOWC) investment. Remember, that under the new tax law, this equipment was full at t=0. If the firm's tax rate is 25%, what is the project's total termination cash flov $434,000 $150,000 $200,000 $534,000 2. Incremental costs - Initial and terminal cash flow Consider the case of Alexander Industries: Alexander Industries is considering a project that requires an investment in new e $3,360,000. Under the new tax law, the equipment is eligible for 100% bonus dep so the equipment will be fully depreciated at the time of purchase. Alexander estin accounts receivable and inventories need to increase by $640,000 to support the n some of which is financed by a $256,000 increase in spontaneous liabilities (accour accruals), The company's tax rate is 25%. The after-tax cost of Alexander's new equipment is Alexander's initial net investment outlay is Suppose Alexander's new equipment is exf useful life, and at the same time, the firm , or $200,000 at the end of (NOWC) investment. Remember, that unde jver all of its net operating at t=0. If the firm's tax rate is 25%, what law, this equipment was ful $434,000 $150,000 $200,000 $534,000 Continue