A new 3-year project has expected annual sales of $20,000, expected annual costs of $10,000, and...

 

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A new 3-year project has expected annual sales of $20,000, expected annual costs of $10,000, and a marginal tax rate of 40 percent. It requires equipment costing $30,000, which has an expected salvage value of zero and will be depreciated using straight line over the 3 years. The project will also require an initial investment in net working capital of $2000. What is the project cash flow in year 1? A new 3-year project has expected annual sales of $20,000, expected annual costs of $10,000, and a marginal tax rate of 40 percent. It requires equipment costing $30,000, which has an expected salvage value of zero and will be depreciated using straight line over the 3 years. The project will also require an initial investment in net working capital of $2000. What is the project cash flow in year 1?

Answer rating: 100% (QA)

To calculate the project cash flow in year 1 we need to consider the projects sales costs depreciati... View the full answer