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TaiGueLe Enterprises, Inc. is considering launching a new corporate project. The company will have to make Capital Investments, Invest in Changes in Net Working Capital,
TaiGueLe Enterprises, Inc. is considering launching a new corporate project. The company will have to make Capital Investments, Invest in Changes in Net Working Capital, and generate Cash Flows from Operating the new project. The company uses Straight-Line depreciation and has a Tax Rate of 20%. The appropriate discount rate for the risks involved is 12%. More details are shown below:
Year | 1 | 2 | 3 | 4 | 5 | 6 | |
Revenue | 5,000,000 | 5,300,000 | 5,600,000 | 5,900,000 | 6,000,000 | 5,000,000 | |
Cash Expense | 2,400,000 | 2,544,000 | 2,688,000 | 2,832,000 | 2,880,000 | 2,500,000 | |
Depreciation | 1,400,000 | 1,400,000 | 1,400,000 | 1,400,000 | 1,400,000 | 1,400,000 | |
End of Year NWC | 500,000 | 530,000 | 560,000 | 590,000 | 600,000 | 500,000 |
In year 6, the firm sells the capital equipment for $600,000. What is the firm's operating cash flow in year 3?
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