Question
A proposed new investment has annual projected sales of 810,000 and annual total costs of 750,000 during its economic life of 6 years. This investment
A proposed new investment has annual projected sales of 810,000 and annual total costs of 750,000 during its economic life of 6 years. This investment will be depreciated over 6 years (straight line) with annual depreciation of 20,000. Moreover, the net working capital will decrease at the amount of 5,000 in every year during its economic life of 6 years (from year 1 to year 6). The company has annual interest payment of 15,000 and tax rate is 40%. What is the annual cash flows received during the first five years of the economic life of the project?
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