Question
Domino Corporation is considering a 3-year project with an initial cost of $470,000. The project will not directly produce any sales but will reduce operating
Domino Corporation is considering a 3-year project with an initial cost of $470,000. The project will not directly produce any sales but will reduce operating costs by $143,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $223,000. The tax rate is 25 percent and the required return is 12 percent. An extra $30,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? (Hint: remember to recover NWC investment when project ends)
$240,719.50
$264,384.00
$295,764.50
$331,087.30
$376,433.50
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