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A new delivery truck can be purchased for $30,000. The old one could be sold today for $5,000, and has a book value of $3,000.
A new delivery truck can be purchased for $30,000. The old one could be sold today for $5,000, and has a book value of $3,000. In three years, the old truck will have a salvage value of $1,000 (and no book value). The new truck would be depreciated on a 5 year MACRS schedule. The firms tax rate is 21%.
If the old truck is sold and the new one bought, what is the operating cash flow for the first three years?
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