Handler Mining Inc. is considering a new project with a life of 5 years. The project requires a machine that costs $228,300. This machine will be depreciated straight-line to a zero book value over 5 years. At the end of the project in Year 5, the machine can be sold for 10 percent of its original cost. Handler Mining Inc. needs to add net working capital of $25,000 immediately and the additional net working capital will be recovered in full at the end of the project’s life. The project is expected to generate annual sales of $325,000 and costs of $146,000. The tax rate is 18 percent and the required rate of return is 8 percent. What is the amount of the cash flow in the project’s final year?

Answer rating: 100% (QA)

To calculate the cash flow in the projects final year we need to consider the following components A... View the full answer