Question
Violet Sky Technology is evaluating a project that would require the purchase of a piece of equipment for 850,000 dollars today. During year 1, the
Violet Sky Technology is evaluating a project that would require the purchase of a piece of equipment for 850,000 dollars today. During year 1, the project is expected to have relevant revenue of 808,200 dollars, relevant costs of 355,500 dollars, and relevant depreciation of 79,100 dollars. Violet Sky Technology would need to borrow 850,000 today for the equipment and would need to make an interest payment of 29,100 dollars to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be 379,138 dollars. What is the tax rate expected to be in year 1? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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