Question
Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be
Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected to be constant over the project's 3-year life. What is the project's Initial Cash Outlay at time 0? I know this answer, its 80000. Need the below questions answered.
|
Net investment in fixed assets (depreciable basis) | $70,000 |
| |||||||||||||
| Required new working capital |
| $10,000 |
| |||||||||||
| Sales revenues, each year |
|
| $95,000 |
| ||||||||||
| Cash operating costs excl. depr'n, each year | $30,000 |
| ||||||||||||
| Expected pretax salvage value |
| $9,000 |
| |||||||||||
| Tax rate |
|
|
|
| 30.0% |
Initial Cash Outlay at time 0 = 80000
what is the Year 1 Net Operating Cash Flow?
what is the Terminal Year NonOperating Cash Flow at the end of Year 3?
Thank you!
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