Question
Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and
Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?
Equipment cost $65,000
Sales revenuew, each year $60,000
Operating cost(excl. depreciation) $25,000
Tax rate 35%
So the answer to the question is $30,258 , but I would like to know how to get to this answer. Please show which formula is used and what numbers are plugged into the equation. Thank you!!!!
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