White Mountain Technology is evaluating a project that would require the purchase of a piece of...

White Mountain Technology is evaluating a project that would require the purchase of a piece of equipment for 660,000 dollars today. During year 1, the project is expected to have relevant revenue of 925,600 dollars, relevant costs of 291,800 dollars, and relevant depreciation of 93,700 dollars. White Mountain Technology would need to borrow 660,000 today for the equipment and would need to make an interest payment of 29,800 dollars to the bank in 1 year. Relevant operating cash flow for the project in year 1 is expected to be 345,495 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.

Expert Solution

Revenue	925,600
Costs	291,800
Depreciation	93,700
EBIT	540,100
Less: Interest	29,800
Earninge before tax	510,300
Less: Tax	258,505
Net Income	251,795
Add: Depreciation	93,700
Operating Cash flow	345,495

Tax Rate	50.66%

jeff jeffy answered 1 month ago

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