PT ABC purchased new equipment that will be used to make computer processors. in the first year of operation of its new equipment, PT ABC will sell 1 billion worth of chips, with a gross profit margin of 40%. Operating costs (excluding depreciation and interest expenses) equal 10% of sales and the company pays tax at a rate of 21%. The equipment is worth 100 million, and based on tax laws in effect before 2018, PT ABC is required to depreciate the equipment based on the five-year MACRS schedule in the table below. Based on tax law, the equipment is entitled to 100% bonus depreciation, which means PT ABC can depreciate the entire purchase price in the first year of operation. Calculate the investment cash flow in the first year! And provide an explanation

Answer rating: 100% (QA)

To calculate the investment cash flow in the first year for PT ABC we need to consider the following ... View the full answer