Question
(CHAPTER 10) A company is considering a 3-year project that requires paying $5,000,000 for a cutting-edge production equipment. This equipment falls into the 3-year MACRS
(CHAPTER 10)
A company is considering a 3-year project that requires paying $5,000,000 for a cutting-edge production equipment. This equipment falls into the 3-year MACRS class and will have a market value of quarter its original purchase price after 3 years. The project requires an initial investment in net working capital of $350,000. The project is estimated to generate $1,200,000 in annual operating cash flows. The company faces a 40% tax rate. The required rate of return on projects like this one is 10 percent.
find after tax-salvage and change in networking capital at the end of 3rd year for both please
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