Question: Bronco Company is considering a 3-year project with an initial cost of $114,000. The project will not directly produce any sales but will reduce operating

Bronco Company is considering a 3-year project with an initial cost of $114,000. The project will not directly produce any sales but will reduce operating costs by $34,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $52,000. The tax rate is 25 percent and the required return is 12 percent. An extra $14,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!