Question
ABC, Inc is planning the purchase of a new equipment which will cost $29,672. The project is expected to last for 6 years. The equipment
ABC, Inc is planning the purchase of a new equipment which will cost $29,672. The project is expected to last for 6 years. The equipment will have a book value of $2,135 at the end of Year 6. The increase in net working capital is expected to be $2,470, all of which will be recouped at the end of the project. The project is expected to have annual operating cash flows of $15,393. What is the Total Cash Flow in Year 6 of the project if the equipment can be sold for $4,576 and the tax rate is 39%?
Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started