Question
Ignore your answer to #7 and assume the annual operating cash flow in years 1-6 is $172,000 The purchase price of the equipment is $500,000
Ignore your answer to #7 and assume the annual operating cash flow in years 1-6 is $172,000
The purchase price of the equipment is $500,000 and it will cost another 10 percent of this price to ship and properly install. In addition, to safely operate the equipment, workers will require an extensive training session that will cost nearly $8,000. The firm has estimated that to begin using the machine, it will need to invest $70,000 in inventories. At the same time accounts payable will increase by $35,000. At the end of its life, Shark Attack hopes to sell the machine to a smaller competitor for $112,000.
Sharks marginal tax rate is 21%.
What is the terminal year cash flows in year 8?
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