Question: A company is considering a new project. The project will generate $200,000 in revenues and $110,000 in operating costs each year for the next 5
A company is considering a new project. The project will generate $200,000 in revenues and $110,000 in operating costs each year for the next 5 years. It would require an additional investment of $150,000 to be depreciated to a zero book value on a straight line basis over 5 years. The investment has a salvage value of $20,000. The tax rate is 40%. At the end of year 5, there is a $10,000 return of networking capital. Determine the annual cash flows (from years 1 through 4, and on year 5).
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