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Horn Company is evaluating an investment project that has a 6-year life and produces the following cash inflows: Years 1 - 4 ............. $20,000 (each
Horn Company is evaluating an investment project that has a 6-year life and produces the following cash inflows: Years 1 - 4 ............. $20,000 (each year) Year 5 .................. $30,000 Year 6 .................. ??????? The initial investment for this project is $98,320 and the net present value of this project was calculated to be $5,057 at a cost of capital of 5%. Calculate the amount of the year 6 cash inflow associated with this investment project. Ignore the effects of income taxes.
PERCENTAGES FROM THE MACRS TABLES
|
| MACRS PROPERTY CLASS |
| ||
| Year | 3-Year | 5-Year | 7-Year | |
| 1 | 33.33% | 20.00% | 14.29% | |
| 2 | 44.45% | 32.00% | 24.49% | |
| 3 | 14.81% | 19.20% | 17.49% | |
| 4 | 7.41% | 11.52% | 12.49% | |
| 5 | ----- | 11.52% | 8.93% | |
| 6 | ----- | 5.76% | 8.92% | |
| 7 | ----- | ----- | 8.93% | |
| 8 | ----- | ----- | 4.46% |
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