Question: Your company is considering a new project whose data are shown below. The required equipment has a 3-year economic life, and it will be depreciated

Your company is considering a new project whose data are shown below. The required equipment has a 3-year economic life, and it will be depreciated by the straight-line method. Revenues and other operating costs are expected to be constant over the projects life. What is the projects Year 3 cash flow?

Equipment costs $23,000

Investment in net operating working capital $3,000

Salvage value $2,000

Sales revenue, each year, $15,000

Operating costs (excluding depreciation) $4,000

Tax rate 35%

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