A given project requires the acquisition of a capital assets purchased outright in year o totaling $100
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Question:
A given project requires the acquisition of a capital assets purchased outright in year o totaling $100 Million. The company expects sales revenues to increase by $50 Million in year one and maintain that level through year 4. Cost of revenue will be $12 Million per year, and fixed expenses will be $5 Million per year. The asset should be depreciated as 5-year MACRS asset, and it will be sold at the end of year 4 for $25 Million (Hint: uses the half-year convention). The company's marginal tax rate is 25%, and it's MARR is 12%. What is the net after-tax cash flow in year 1?
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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