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Whitestone Products is considering a new project whose data are shown below. The required equipment has a 5-year tax life, and the company uses a
Whitestone Products is considering a new project whose data are shown below. The required equipment has a 5-year tax life, and the company uses a straight line depreciation method. Revenues and other operating costs are expected to be constant over the project's 10-year expected operating life. What is the project's Year 5 cash flow?
Equipment cost (depreciable basis) | $50,000 |
Sales revenues, each year | $42,500 |
Operating costs (excl. deprec.) | $25,000 |
Tax rate | 35.0% |
a. | $17,500 | |
b. | $11,375 | |
c. | $15,003 | |
d. | $10,500 | |
e. | $14,875 |
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