Question
1. Zippy Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold
1. Zippy Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $12,300, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent. (Round answer to 2 decimal places)
2.Six Twelve, Inc., is considering opening up a new convenience store in downtown New York City. The expected annual revenue at the new store is $800,000. To estimate the increase in working capital, analysts estimate the ratio of cash and cash-equivalents to revenue to be 0.03 and the ratios of receivables, inventories, and payables to revenue to be 0.05, 0.10, and 0.04, respectively, in the same industry. What is the incremental cash flow related to working capital when the store is opened? (Enter negative amount using either a negative sign)
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