Question: A complete small business computer system costs $40,000. In addition, it paid a consultant $1000 last year for her advice on the type of computer
A complete small business computer system costs $40,000. In addition, it paid a consultant $1000 last year for her advice on the type of computer system the company should buy. The new computer falls under the 5-year MACRS. This new system is expected to generate additional revenue of $15,000 per year for the next 3 years and also reduce expenses by $10,000 per year. At the end of 3 years, the system will be sold for $17,500. Tax rate is 34%. Round all values to the nearest dollar. Calculate initial investment, operating cash flows and terminal cash flow.
can you please show me terminal cash flow
here's what I have and clarify I'm right for first parts, thanks!
Initial Investment
Cost 40,000
Total Initial 40,000
| Year | 1 | 2 | 3 |
| Revenue | 15,000 | 15,000 | 15,000 |
| Costs | -10,000 | -10,000 | -10,000 |
| EBDT | 25,000 | 25,000 | 25,000 |
| Depreciation | 8000 | 12800 | 7680 |
| EBT | 17000 | 12200 | 17320 |
| Tax at 34% | 5780 | 4148 | 5888.80 |
| NIAT | 11220 | 8052 | 11431.20 |
| Depreciation | 8000 | 12800 | 7680 |
| CFAT | 19220 | 20852 | 19,111.20 |
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