Question
Your company, CSUS Inc., is considering a new project whose data are shown below. The required equipment is categorized into the MACRS 3-year class, and
Your company, CSUS Inc., is considering a new project whose data are shown below. The required equipment is categorized into the MACRS 3-year class, and the accelerated rates for such property are 33.0%, 45.0%, 15.0%, and 7.0% for Years 1 through 4. Savings in pre-tax labor costs and other operating costs are expected to be constant over the project's 10-year expected operating life. What is the project's Year 4 cash flow?
Equipment cost (depreciable basis)$70,000
Cost savings in pre-tax labor, each year$53,000
Operating costs (excl. depr.)$25,000
Tax rate35.0%
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