Question
Question) Today (Year 0), Kangaroo Enterprises is evaluating whether to purchase a new jetboat to operate scenic thrill rides around Lord Howe Island. The company
Question) Today (Year 0), Kangaroo Enterprises is evaluating whether to purchase a new jetboat to operate scenic thrill rides around Lord Howe Island. The company currently has two other boats offering a snorkelling tour and a glass bottom boat tour. The jetboat costs $1,800,000. The jetboat project is expected to last ten years. The Australian Tax Officestates the jetboat should be depreciated to zero over a 15-year life.
In Year 0, the new jetboat tour will result in an increase in inventory for Kangaroo Enterprises from $17,000 to $24,000. The company anticipates that accounts payable immediately required for the jetboat tour will increase by $11,000.
The company has already agreed to sell the jetboat in ten years' time to an unrelated firm for $250,000.
The company is expecting the jetboat rides will be very popular and are anticipating paying a one-off special dividend to shareholders of $150,000 at the end of the project.
Assume the company tax rate is 30%.
What are the 'cash flows at the end'?
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