Question
LOL Ltd is a mining company and is evaluating a new plant for a coal mine. The plant project will last for ten years and
LOL Ltd is a mining company and is evaluating a new plant for a coal mine. The plant project will last for ten years and LOL has been given the following estimates that relate to running the new plant. The new plant will cost $330,000. The plant will have no value in ten years’ time. LOL depreciates all assets over a ten year life span. The taxation office has provided advice to LOL that the plant are depreciated over 18 years. The project will require an investment in inventory of $120,000 at the start of the project. The interest on the loan is $18,000 per year. The company pays dividends of $200,000 per year. The company tax rate is 30%. What is the total cash flow at the end of the project.
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
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9780470374948, 470423684, 470374942, 978-0470423684
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