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The Nisit Corporation is considering a project with a five-year life. The project requires $70,000 of fixed assets (initial installed cash outlay) that are classified
The Nisit Corporation is considering a project with a five-year life. The project requires $70,000 of fixed assets (initial installed cash outlay) that are classified as five-year property for MACRS. Variable costs equal 65 percent of sales, fixed costs are $14,000, and the tax rate is 36 percent. What is the operating cash flow for Year 4 given the following sales estimates and MACRS depreciation allowance percentages?
Year | 1 | 2 | 3 | 4 | 5 |
Sales | $24,000 | $26,000 | $28,000 | $30,000 | $32,000 |
MACRS rate | 20.00 | 32.00 | 19.20 | 11.52 | 11.52 |
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