Question: Page | 8 | | Hilden Co . is considering a five - year project requiring $ 8 0 0 , 0 0 0 for

Page
|8||
Hilden Co. is considering a five-year project requiring $800,000 for new fixed assets that will be depreciated straight-line to a zero book value over ten years. No bonus depreciation will be taken. At the end of the project, the fixed assets can be sold for $300,000. The project is expected to generate annual sales of $700,000 with costs of $350,000. The tax rate is 22 percent, and the required rate of return is 13.2 percent. What is the amount of the after-tax salvage value?
A) $624,000
B) $546,000
C) $273,000
D) $234,000
E) $426,000
Text Mom, Inc. is considering a new five-year expansion project that requires an initial fixed asset investment of $5,000,000. The fixed asset will be depreciated straight-line to zero over the project's life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $4,000,000 in annual sales, with costs of $2,000,000. The tax rate is 24 percent. What is the annual operating cash flow for this project?
A) $1,760,000
B) $2,000,000
C) $1,520,000
D) $890,000
E) $760,000
 Page |8|| Hilden Co. is considering a five-year project requiring $800,000

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!