Question
1. A new proposed project has yearly cash sales of $108,000, cash costs of $51,000, and depreciation of $6,800. That tax rate is 35%.
1. A new proposed project has yearly cash sales of $108,000, cash costs of $51,000, and depreciation of $6,800. That tax rate is 35%. What is the yearly operating cash flow of the project? 2. A firm sells an asset for $105,000 at the end of a project. The tax rate is 35%. Compute the after-tax salvage value in each case if the book value of the asset is $105,000, $50,000, or $150,000. Tax Rate: Before-tax Salvage Value Book Value Gain/(Loss) Tax on Gain/(Loss) After-tax Salvage Value Capital Investment In-Class Exercise After-tax Salvage Value 35.00% 1 105,000 $ 105,000 $ 2 105,000 $ 50,000 $ 3 105,000 150,000
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
11th edition
77861752, 978-0077861759
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