Question: ABC Company is considering a new project whose data are shown below. The required equipment has a 4-year tax life, after which it will be

ABC Company is considering a new project whose data are shown below. The required equipment has a 4-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 4 years. Revenues and other operating costs are expected to be constant over the projects 4-year life. What is the projects Year 1 cash flow?

Equipment cost (depreciable basis) $60,000

Sales revenues, each year $66,000

Operating costs (excl. deprec.) $25,000

Tax rate 30.0%

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