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Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be
Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow?
Equipment cost (depreciable basis) | $69,000 |
Straight-line depreciation rate | 33.333% |
Sales revenues, each year | $60,000 |
Operating costs (excl. depr.) | $25,000 |
Tax rate | 35.0% |
a. | $31,416 |
b. | $30,800 |
c. | $38,192 |
d. | $30,492 |
e. | $31,724 |
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