A firm is considering a project with the following information: Project will require purchase of a...
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A firm is considering a project with the following information: Project will require purchase of a machine for $94,862.00 that is MACRS depreciable over a five-year schedule. (no depreciation until end of year 1). • Project will require immediate non-depreciable expenses of $25,229.00 TODAY (year 0). Project will have the following projected balance sheet values of NWC: . YEAR NWC Level 0 $4,000 8.00% of sales What is the project's cash flow for year 17 2 9.00% of sales Sales for the project will be $48,793.00 per year, with all other expenses (excluding depreciation) at 50.00% of sales. The tax rate for the firm is 35.00%, while the cost of capital is 15.00% "assume project goes beyond two years A firm is considering a project with the following information: Project will require purchase of a machine for $94,862.00 that is MACRS depreciable over a five-year schedule. (no depreciation until end of year 1). • Project will require immediate non-depreciable expenses of $25,229.00 TODAY (year 0). Project will have the following projected balance sheet values of NWC: . YEAR NWC Level 0 $4,000 8.00% of sales What is the project's cash flow for year 17 2 9.00% of sales Sales for the project will be $48,793.00 per year, with all other expenses (excluding depreciation) at 50.00% of sales. The tax rate for the firm is 35.00%, while the cost of capital is 15.00% "assume project goes beyond two years
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SOLUTION To calculate the projects cash flow for year 17 we need to calculate the cash flows for eac... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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