The ABC Co. is analyzing a project that has projected sales of $189,400 and costs of...

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The ABC Co. is analyzing a project that has projected sales of $189,400 and costs of $102,300. The project requires an investment in inventory of $15,000. Fixed assets of $80,000 are needed and will be depreciated using the MACRS three year class. Accounts payable will increase by $36,000. The increases in inventory and account payable will revert back to normal at the end of the project's life. An interest expense of $11,000 will be incurred annually. The project has a life of 3 years. At the end of the three years, the equipment has a salvage value of $26,000. The company requires a 10% rate of return. The tax rate is 34%. What is the total cash flow in year 0? What is the total cash flow in year 1? What is the annual cash flow in year 3? The ABC Co. is analyzing a project that has projected sales of $189,400 and costs of $102,300. The project requires an investment in inventory of $15,000. Fixed assets of $80,000 are needed and will be depreciated using the MACRS three year class. Accounts payable will increase by $36,000. The increases in inventory and account payable will revert back to normal at the end of the project's life. An interest expense of $11,000 will be incurred annually. The project has a life of 3 years. At the end of the three years, the equipment has a salvage value of $26,000. The company requires a 10% rate of return. The tax rate is 34%. What is the total cash flow in year 0? What is the total cash flow in year 1? What is the annual cash flow in year 3?

Answer rating: 100% (QA)

To calculate the total cash flow in year 0 year I and the annual cash flow in year 3 we need to cons... View the full answer