Question
Reliable Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the
Reliable Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the MACRS rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year life. What is the project's operating cash flow during Year 1? Equipment cost (depreciable basis) $75,000 MACRS rates, years 1-4 33% 45% 15% 7% Sales $60,000 Operating costs excl. deprn $25,000 Tax rate 35% $31,413 $32,793 $33,654 $34,875 $35,245
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