Kinston Limited is considering investing in new equipment that will cost 126000 dollars and will last for
Question:
Kinston Limited is considering investing in new equipment that will cost 126000 dollars and will last for three years. The equipment will be fully depreciated using the straight-line method. The equipment will generate revenues of 114000 dollars each year and the cost of goods sold will be 50% of sales. At the end of year three, the equipment will be sold for 15000 dollars. The appropriate cost of capital is 10% and Kinstons tax rate is 35%.
What is the free cash flow in the final year (i.e., free cash flows in year three)? (Round your final answer to the nearest dollar if needed)
Note: For all the calculation questions, you are only allowed to write the numerical answer you calculated for the question, please DO NOT add $, %, dollars, million, thousand, percent, space, etc. in your answers.
Answer: