Question
ABC, Inc is planning the purchase of a new equipment which will cost $36,469. The project is expected to last for 5 years. The equipment
ABC, Inc is planning the purchase of a new equipment which will cost $36,469. The project is expected to last for 5 years. The equipment will have a book value of $2,134 at the end of Year 5. The increase in net working capital is expected to be $2,417, all of which will be recouped at the end of the project. The project is expected to have annual operating cash flows of $19,396. What is the Total Cash Flow in Year 5 of the project if the equipment can be sold for $5,560 and the tax rate is 32%?
Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow
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