Question
Blue Eagle Recycling is evaluating a project that would require the purchase of a piece of equipment for 880,000 dollars today. During year 1, the
Blue Eagle Recycling is evaluating a project that would require the purchase of a piece of equipment for 880,000 dollars today. During year 1, the project is expected to have relevant revenue of 879,400 dollars, relevant costs of 212,400 dollars, and relevant depreciation of 73,600 dollars. Blue Eagle Recycling would need to borrow 880,000 today for the equipment and would need to make an interest payment of 32,800 dollars to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be 516,098 dollars. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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