QUESTION 27

Chapter 11 Answer questions 27 and 28 using the following problem A project will produce operating cash flows of $60,000 a year for four years. At the time of the investment, current assets will increase by S20,000 and current a liabilities will decrease by $5,000. The project requires the purchase of equipment at an initial cost of S200,000. The equipment will be depreciated straight-line to zero book value over the life of the project. The equipment will be salvaged at the end of the project creating a $30,000 after-tax salvage value: At the end of the project, net working capital will return to its normal level. What is the total cash flow (free cash flow) at ime