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Ken Smith wants to start a deck and fence company. To start the business, Ken plans to invest $70,000 in pick-up trucks and tools. Ken
Ken Smith wants to start a deck and fence company. To start the business, Ken plans to invest $70,000 in pick-up trucks and tools. Ken is forecasting that he will build 100 decks in the first year and 120 decks in years 2 and 3. He anticipates that the average deck will be priced at $6,500. Ken estimates that the cost of lumber for the typical deck is $2,000. Rent, office expenses, vehicle expenses, wages and salaries will total $350,000 per year. Ken plans to carry an inventory of lumber of $25,000. At the end of three years, Ken thinks that he can sell the trucks for $10,000, but the tools will be worthless. The corporate tax rate is 30%. What are the terminal year cash flows? (Assume that depreciation is not tax deductible.) Round your answers to the nearest dollar. $
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