Question
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $677,000 that would be depreciated on a straight-line basis to
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $677,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $182,000 at the end of the project. The project requires $52,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $165,300 a year. What is the net present value of this project if the relevant discount rate is 14 percent and the tax rate is 40 percent? please explain how to get the cash flow for year 6
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