Question
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $9,000 and sell its old fully-depreciated
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $9,000 and sell its old fully-depreciated washer for $2,200. The new washer will last for 6 years and save $2,700 a year in expenses. The opportunity cost of capital is 19%, and the firms tax rate is 21%. The firm uses straight-line depreciation over a 6-year life. The new washer will have zero salvage value after 6 years, and the old washer is fully depreciated. What are the operating cash flows (Ct) of the project in years 1 to 6?
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