Question: Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be
Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number.
| Equipment cost (depreciable basis) | $97,000 |
| Straight-line depreciation rate | 33.333% |
| Sales revenues, each year | $60,000 |
| Operating costs (excl. depr.) | $25,000 |
| Tax rate | 35.0% |
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Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number.
| Equipment cost (depreciable basis) | $97,000 |
| Straight-line depreciation rate | 33.333% |
| Sales revenues, each year | $60,000 |
| Operating costs (excl. depr.) | $25,000 |
| Tax rate | 35.0% |
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