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Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per
Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per year and will have no salvage value at the end of its life. Ignore taxes unless told to include them. Using straight-line depreciation over the life of the asset, what is the after tax cash flow in year 3? Assume a 30% tax rate and that the original cash flow was before tax.
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