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ABC Company is considering a new project whose data are shown below. The required equipment has a 5-year tax life, after which it will be
ABC Company is considering a new project whose data are shown below. The required equipment has a 5-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 5 years. Revenues and other operating costs are expected to be constant over the projects 5-year life. What is the projects Year 1 cash flow?
Equipment cost (depreciable basis) $80,000
Sales revenues, each year $66,000
Operating costs (excl. deprec.) $28,000
Tax rate 30.0%
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