Question
A new molding machine is expected to produce sales of $210,000 a year for 4 years, and cash (non-depreciation) costs of 125,000 per year. There
A new molding machine is expected to produce sales of $210,000 a year for 4 years, and cash (non-depreciation) costs of 125,000 per year. There is 0 interest, and the tax rate is 21%. At the beginning of the project, inventory will decrease by $8,700, accounts receivables will increase by $9,500, and accounts payable will decrease by $5,200. All net working capital will be recovered at the end of the project. The initial cost of the molding machine is $319,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. No bonus depreciation will be taken. The equipment will be salvaged at the end of the project creating an after tax cash inflow of $51,600.
What are the Operating Cash Flows and the Cash Flow from Assets over the next 4 years (including the present)?
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