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The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $ 7 0,000,
The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $ 7 0,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm's before-tax revenues by $ 28 ,000 per year but would also increase operating costs by $ 18 ,000 per year. The computer is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent.
What is the operating cash flow in Year 2? Round it to a whole dollar, and do not include the $ sign.
What is the operating cash flow in Year 2? Round it to a whole dollar, and do not include the $ sign.
Year | MACRS Percent |
1 | 0.33 |
2 | 0.45 |
3 | 0.15 |
4 | 0.07 |
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