Question
Please include detailed explanation on how to find eaxh cf, thank you. Jefferson Corporation is purchasing equipment with a 10-year life which will increase revenue
Please include detailed explanation on how to find eaxh cf, thank you.
Jefferson Corporation is purchasing equipment with a 10-year life which will increase revenue by $38,000 per year and increase expenses by $21,000 per year. The cost of the project is $24,000, and the equipment has a salvage value of $9,000 at the end of the tenth year. The project will require a $6,000 investment in net working capital immediately. The equipment will be depreciated for 10 years using simplified straight line. Jefferson's marginal tax rate is 35%. Calculate the total year 10 net cash flow, including both the last annual cash flow and the project's terminal cash flow. a) $23,740 d) $17,740 b) $21,340 e) $11,890 c) $20,890
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