Question
TheyChat Ltd has asked you to evaluate the proposed acquisition of a new computer system. The system's price is $30,000, installation costs are $9,000, and
TheyChat Ltd has asked you to evaluate the proposed acquisition of a new computer system. The system's price is $30,000, installation costs are $9,000, and the system will be depreciated straight-line over a three-year life. Purchase of the system would require an increase in net operating working capital of $2,000. The system would increase the firm's before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The system is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 30%. What is the net operating net cash flow in Year 1? Select one: a. $10,240 b. $13,453 c. $9,000 d. $14,400 e. $11,687
Please explain step to step how you got the answer. please do not provide working with "tables". I didn't understand them last time. Thank you
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