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You are evaluating the proposed acquisition of a new computer. The computer's price is $ 8 0,000 and it falls into the MACRS 3-year class.
You are evaluating the proposed acquisition of a new computer. The computer's price is $ 8 0,000 and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in operating working capital of $2,000. The computer would increase the firm's before-tax revenues by S 28,000 per year but would also increase operating costs by $ 16,000 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 S sign. net Year MACRS Percent 0.33 2 0.45 3 0.15 0.07
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