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280,000 330,000 SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales The
280,000
330,000
SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20% 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% 10-Year 10.00% 18.00% 14.40% 11.52% 9 22010 Year 4 6.55% 6.55% 6.56% 6.55% 3.28% 8 10 12 The operating cash flow for year 7 is $326,550 $320,000 $293,800Step by Step Solution
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