Question
Eisenhower Communications is trying to estimate cash flows for a proposed project. The following information has been collected on the project: Equipment cost $10,000 Working
Eisenhower Communications is trying to estimate cash flows for a proposed project. The following information has been collected on the project:
| Equipment cost | $10,000 |
| Working capital investment | $2,000 |
| Revenue | $10,000 |
| Operating Expense (excluding depreciation) | $6,000 |
| Interest expense | $2,000 |
| Tax Rate | 40% |
| Salvage value | $4,000 |
| Project lifespan | 4 years |
| Year | Depreciation Rate |
| 1 | 33% |
| 2 | 45% |
| 3 | 15% |
| 4 | 7% |
Saved
The initial investment outlay or cash flow at the start of the project (time 0) is:
options:
|
| ($4,000) |
|
| ($8,000) |
|
| ($12,000) |
|
| ($10,000) |
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
